KRA Proposes Stricter Rules for Importing Vehicles, Motorcycles, and Trailers

The Kenya Revenue Authority (KRA) has unveiled draft amendments to the Tax Procedures Act, targeting the importation of unassembled motor vehicles, trailers, and motorcycles. 

These proposals, released on 6th February 2025, aim to bolster local assembly and manufacturing industries.

The proposed regulations, titled the Tax Procedures (Unassembled Motor Vehicles and Trailers) (Amendment) Regulations, 2024, and the Tax Procedures (Unassembled Motorcycles) (Amendment) Regulations, 2024, seek 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.

A key highlight of the amendments is the revision of the definition of “unassembled motor vehicles and trailers.” The new definition specifies that these are vehicles and trailers “imported in completely knocked down form for purposes of assembly in Kenya.” 

This clarification aims to ensure that only genuine CKD units benefit from tax incentives designed to promote local assembly.

Additionally, the amendments propose stricter compliance requirements for assemblers. Assemblers will be mandated to provide detailed reports on the sourcing of components, ensuring adherence to local content thresholds. 

Failure to meet these requirements could result in penalties or revocation of assembly licences.

The KRA emphasises that these changes are intended to “promote the development of local industries and enhance the competitiveness of locally assembled vehicles and motorcycles.” 

By tightening regulations, the authority aims to curb the misuse of CKD importation schemes, where fully built units are imported under the guise of CKD kits to evade taxes.

However, concerns have been raised about the readiness of local industries to meet the anticipated increase in demand for locally sourced components. 

The proposed amendments also introduce measures to enhance transparency in the assembly sector. Assembly companies will be required to maintain comprehensive records of their operations, which will be subject to periodic audits by the KRA.

The KRA has invited public participation in the legislative process. Stakeholders and members of the public are encouraged to submit their inputs and comments on the draft regulations by February 21, 2025.