The Kenya Revenue Authority (KRA) is inviting the public, professionals, and stakeholders to submit their feedback on two draft tax regulations.
These regulations propose amendments to the Tax Procedures for unassembled motor vehicles, trailers, and motorcycles.
Developed in compliance with the Treasury Cabinet Secretary and in line with the Statutory Instruments Act, Cap. 2A, these draft regulations aim to improve the tax system and adapt it to meet current needs.
They are aimed at supporting local assembly and manufacturing.
It seeks to amend existing frameworks governing the importation of Completely Knocked Down (CKD) kits.
CKD kits are vehicles and motorcycles imported in parts for local assembly.
"Submissions should be sent to the Commissioner General, KRA, by February 21, 2025, either by post or email at [email protected]," reads an advertisement in a weekly paper dated February 11, 2025.
A key amendment is the updated definition of "unassembled motor vehicles and trailers," specifying that they refer to vehicles and trailers imported in CKD form for assembly in Kenya.
This change seeks to ensure that only genuine CKD units qualify for tax incentives designed to promote local assembly.
The regulations also introduce stricter compliance requirements for assemblers, who will be required to provide detailed reports on the sourcing of components to meet local content thresholds.
These measures are aimed at preventing the misuse of the CKD importation scheme, where fully assembled units may be imported as CKD kits to avoid taxes.
"The authorized assembler using knock-down kits level 2 for pick-ups shall be allowed for a maximum of 2 years after which the assembler shall assemble the pick-ups at level 3," it states in part.
Non-compliance, according to the regulations, could lead to penalties or the revocation of assembly licenses.
The new regulations will also cover electric motor vehicles.
It states that the power electronics for electrical motor vehicles, including the control system, lithium-ion battery, motors, and/or power inverters, may be imported in the condition supplied by the Original Equipment Manufacturer.
"All other parts of the electric motor vehicle breakdown shall be as per the First Schedule, Second Schedule, Third Schedule, Fifth Schedule, and Sixth Schedules to these Regulations, and must comply with the prescribed standards and specifications set forth in each respective schedule for quality, safety, and environmental impact," it reads.
The authority has encouraged stakeholders to provide their comments and suggestions to ensure the final regulations reflect a broad range of views.
The regulations are available on the KRA website.