Kenya has announced intentions to exclude domestically produced passenger vehicles from VAT and excise charge, with the goal of lowering car prices and encouraging local production.
If enacted, the automobiles will be free from all significant tariffs that apply to fully-assembled vehicles imported from South Africa, the United Kingdom, and Japan.
Import duties of 25%, excise duties of 20%, and VAT of 16% are normally applied on cars made outside of the United States.
In his latest budget address, Kenya’s Treasury CS Ukur Yatani remarked, “In order to stimulate more investment in the local production of passenger automobiles, I propose to exempt from VAT inputs and raw materials utilized in the local manufacture of passenger motor vehicles.”
Removal of VAT on inputs and raw materials will benefit suppliers of assemblers including manufacturers of paint, steel, and upholstery.
Assemblers of passenger cars such as Simba Corp and DT Dobie currently enjoy exemption from the 25% import duty.
Sales for locally assembled vehicles rose to a record 70.6% of the total sales in 2021, moving 10,054 units compared to 4,195 units of fully built imported vehicles.