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Only Kenyans returning home permanently and have owned left hand drive cars abroad for at least one year will be allowed to replace and import right-hand vehicles without paying duty as the Treasury moves to seal off tax-evasion loopholes.
Under the new guidelines developed to allow owners of left-hand vehicles to enjoy tax concession when they return home, the Treasury says beneficiaries will also have to prove disposal of previous vehicles.
“These guidelines shall only apply to residents returning from countries that operate left-hand drive vehicles who had previously owned and used them in the country of former residence,” the Treasury says in the guidelines that it has issued to the country’s foreign missions.
Kenya allows its citizens living abroad to ship in their right-hand vehicles without paying duty when they finally come back to settle.
This benefit has, however, not been available to citizens that reside in more than 160 countries that use left-hand vehicles. The list of affected states includes Rwanda and Burundi, which have, since 2007, become part of EAC and other states like US and Russia.
When he visited the US last year, President Uhuru Kenyatta promised tax relief for returning Kenyans who replace their left-hand drive vehicles.
The directive, which was meant to take effect from November, was delayed up to this month to enable the Kenyan officials lobby other East African partner states.
The green light given early this month by the regional bloc EAC means Kenyans returning from any of the affected countries will be spared the 25 per cent import duty and 20 per cent excise after replacements.
The Treasury has, however, taken early steps to block shrewd traders from exploiting the facility to evade taxes. Under the guidelines released on Monday, the Treasury says the right-hand vehicle must be of the same category as those replaced.
Commercial vehicles like buses or minibuses seating more than 13 and load-carrying vehicles weighing more than two tonnes are not covered by the scheme.
The cars must be less than eight years old. “The guidelines will be administered by KRA and all applications to utilise the facility should, therefore, be made to the Commissioner of Custom Services,” says Treasury.
– Business daily