Elijah Ntongai, a journalist at TUKO.co.ke, has more than three years of financial, business, and technology research and reporting expertise, providing insights into Kenyan and global trends.

The Kenya Revenue Authority (KRA) has invited public participation in reviewing proposed amendments to tax procedures affecting the importation and assembly of motor vehicles, trailers, and motorcycles.

KRA has shared the draft Tax Procedures (Unassembled Motor Vehicles and Trailers) (Amendment) Regulations, 2024 and Tax Procedures (Unassembled Motorcycles) (Amendment) Regulations, 2024 for review and urged stakeholders to submit their feedback by February 21, 2025.

The amendments, spearheaded by the Cabinet Secretary for the National Treasury and Economic Planning, John Mbadi, aim to promote local vehicle manufacturing, technology transfer, and electric vehicle adoption.

According to KRA, the changes are intended to streamline the importation and assembly process while boosting Kenya’s industrialisation agenda.

The Tax Procedures (Unassembled Motor Vehicles, and Trailers) (Amendment) Regulations, 2024, issued under the Tax Procedures Act (Cap. 469B), seeks to expand the scope of the 2019 regulations by incorporating provisions for the manufacture and assembly of motor vehicles, three-wheelers, and trailers under various tax regulations.

One of the key changes introduced in the amendments is the inclusion of three-wheelers and electric vehicles within the regulatory framework by inserting new definitions.

The draft's new definitions will include the components of electric vehicles, such as battery systems, electric power systems, and electric motors.

New definitions include,

The regulations seek to address crucial gaps in Kenya's electric vehicle supply chain by allowing the importation of power electronics, lithium-ion batteries, and electric motors from Original Equipment Manufacturers (OEMs).

The Tax Procedures (Unassembled Motorcycles) (Amendment) Regulations, 2024, introduced under the Tax Procedures Act (Cap. 469B) seek to reform Kenya’s motorcycle assembly and manufacturing sector.

The draft amendments expand the scope of the 2020 regulations to include electric motorcycles, updating key definitions and processes to align with the country’s push for local production and sustainable transport.

Among the major changes, are new definitions to formally recognise electric motorcycles, battery systems, and electric power systems, and bring them under the regulatory framework.

Additionally, manufacturers will be required to use at least 50% locally designed and developed parts to promote domestic innovation and industrial growth.

The amendments also broaden the scope of assembly and manufacturing regulations by allowing both manufacturers and assemblers to operate under the same framework. Previously, only authorised assemblers could operate assembly plants, but this requirement has been removed to increase flexibility.

To encourage the production of electric motorcycles in Kenya, the draft regulations will allow duty-free import provisions for essential components such as motors, controllers, and DC-to-DC converters.

Lithium-ion batteries will be fully exempt from duties while other battery types remain subject to import taxes.

The new framework is designed to boost local manufacturing, attract investors, and create a more efficient and sustainable motor industry in Kenya.

KRA has urged industry players, investors, and the general public to submit their views via the email - [email protected] or through physical mail addressed to the Commissioner General, Kenya Revenue Authority, P.O. Box 48240-00100, Nairobi.

The final draft will be shaped by public feedback before being officially adopted for importation and tax purposes.

In other news, KRA collected KSh 1.12 trillion on behalf of the National Treasury, while agency revenue amounted to KSh 122.872 billion.

In the financial year ending June 2024, customs revenue grew by 4.9% to KSh 791.368 billion compared to the previous fiscal year.

However, the Purchasing Managers Index (PMI), which averaged 49.2 points between July and December 2024, weakened.

Proofreading by Otukho Jackson, a multimedia journalist and copy editor at TUKO.co.ke

Source: TUKO.co.ke