Vehicle owners to pay Sh100K in new tax proposals

The Finance Bill 2024 includes a provision for the implementation of a Motor Vehicle Tax, set at a rate of 2.5 per cent of the vehicle’s value.

According to the proposal, the minimum tax payable on each vehicle at the time of insurance issuance will be Sh5,000, with a maximum cap of Sh100,000.

This tax calculation will be determined based on factors such as the vehicle’s make, model, engine capacity, and year of manufacture.

Furthermore, insurers are required to collect and remit the motor vehicle tax within five working days after issuing an insurance cover.

Failure to do so will result in penalties, with insurers facing a fine equivalent to 50 per cent of the uncollected tax plus the actual amount of the tax outstanding.

Ambulances and vehicles owned by various government entities, including the national government, county government, Kenya Defence Forces, National Police Service, National Intelligence Service, or individuals exempt from tax under the Privileges and Immunities Act Cap. 179, are exempt from this tax.

The Bill also grants the Commissioner the authority to establish guidelines for determining the valuation of a motor vehicle.

These tax proposals are part of the Kenya Kwanza government’s efforts to generate revenue to fund its ambitious projects.