NAIROBI, Kenya, June 14-The government has retracted the sh 100,000 cap for motor vehicles in a move that will see motor vehicle owners pay an upward of sh 400,000 in the proposed wealth tax.
Under the new system, vehicle owners will now be taxed based on the current market value of their vehicles.
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The minimum annual tax payable will be sh 5,000, ensuring that even lower-valued vehicles contribute to the nation’s revenue according to Treasury Cabinet Secretary Njuguna Ndung’u.
” To expand the tax base and make our country self-reliant, I propose to introduce an annual motor vehicle tax at the rate of 2.5% of the value of the vehicle subject to minimum amount of Ksh 5,000 per annum,” he said.
This means that luxury vehicle owners will have to pay more owing to the high value of their vehicles.
This points to a likelihood of scaled-down purchases of those high-end units as buyers shy away from paying the levy.
Ndung’u asserted that this move is expected to generate substantial additional income for the government, helping to fund critical infrastructure projects and public services.
This is a departure from the government’s position earlier proposal under the proposal contained in the Finance Bill 2024 which set out revenue-raising measures for the 2024/25 Finance Year.
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It stipulated that the underwriter would have five working days to remit the tax.
Failure to remit the tax on time will attract a 50 percent penalty calculated on the unremitted tax in addition to the actual amount.
The law will exempt ambulances and government-owned vehicles from the motor vehicle circulation tax under the Privileges and Immunities Act.
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