The Kenya Revenue Authority (KRA) is set to implement a significant change in the valuation parameters for used motor vehicles, following President William Ruto's directive issued during a stakeholders' engagement at the Port of Mombasa on Thursday.

This is according to a memo the authority issued to its staff in the customs and border control department on the same day.

This directive aims to harmonize the valuation methods applied by various Partner Government Agencies (PGAs) and address concerns raised by motor vehicle importers.

Currently, KRA employs the first month of registration as the basis for valuing used motor vehicles, while other PGAs use a full year.

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The challenge arises when the date of first registration is unknown, leading to the use of the last month of the calendar year to determine the rate of depreciation and the customs value for taxation purposes.

This practice has been a source of contention among importers, particularly when presented documents lack the date of first registration.

In response to the Presidential directive, Kenya Customs will now adopt a new depreciation schedule provided by the East African Community Council of Ministers.

This schedule aims to provide a standardized and fair method for valuing used motor vehicles, addressing the concerns of both government agencies and importers.

The newly implemented EAC Depreciation Schedule is as follows:

• Vehicles aged more than 1 year and less than or equal to 2 years will be depreciated at a rate of 20 per cent.

• Vehicles aged more than 2 years and less than or equal to 3 years will face a depreciation rate of 30 per cent.

• For vehicles more than 3 years and less than or equal to 4 years old, the depreciation rate will be 40 per cent.

• Vehicles aged more than 4 years and less than or equal to 5 years will be subject to a 50 per cent depreciation rate.

• Vehicles more than 5 years and less than or equal to 6 years old will have a depreciation rate of 55 per cent.

• For vehicles aged more than 6 years and less than or equal to 7 years, the rate will be 60 per cent.

• Finally, vehicles older than 7 years but less than or equal to 8 years will face a 65 per cent depreciation rate.

This new depreciation schedule will go into effect on September 1, 2023, and is mandatory for all staff within the Customs & Border Control Department.

It is expected to streamline the valuation process for used motor vehicles and ensure consistency in customs value determination.

This change is expected to have a significant impact on the motor vehicle importation industry, bringing clarity and uniformity to the valuation process.