Following public concern regarding recently updated motor vehicle prices, the Kenya Revenue Authority (KRA) issued a statement on June 6, 2025, clarifying the rationale and process behind the revised Current Retail Selling Price (CRSP). The statement, a response to inquiries stemming from a May 30th announcement regarding updated prices for imported second-hand vehicles, addressed four key areas: the legal basis of customs valuation, the definition and purpose of the CRSP, the reasons for its review, and the methodology used to update it.
How Does KRA Decide Car Prices?
The KRA reiterated that the World Trade Organization (WTO) Agreement on Customs Valuation legally grounds customs valuation, and Kenya implements it through Section 122 and the Fourth Schedule of the East African Community Customs Management Act (EACCMA), 2004. This framework dictates the methods used to determine the customs value of imported goods.
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What is CRSP?
According to the KRA, the CRSP represents the market price of a new motor vehicle. To calculate the customs value of a used vehicle, the KRA applies depreciation to this CRSP based on the vehicle’s age since manufacture or first registration. The adoption of the CRSP method, following the WTO agreement, was a collaborative decision with stakeholders, designed to address inconsistencies in valuing used motor vehicles and promote standardization, predictability, and transparency within the industry. The KRA emphasizes that it intends to regularly review the CRSP to reflect evolving economic conditions, including fluctuations in exchange rates, inflation, the introduction of new vehicle models, and adjustments to tax policies.
The need for the recent CRSP review stems from a legal challenge in 2020, which prevented the KRA from updating the list since 2019. This stagnation, coupled with significant economic shifts, necessitated a new review conducted in consultation with stakeholders. To illustrate, the exchange rate in 2019 was approximately Kshs. 100 to the US dollar, compared to around Kshs. 130 in 2025. Furthermore, the import duty rate, a crucial component of the CRSP, has increased from 25% to 35% during the same period.
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How Did KRA Update the CRSP for 2025?
The KRA detailed the rigorous process undertaken to review and update the 2025 CRSP, highlighting the following key steps:
Stakeholder Engagements
Following a court order, the KRA engaged in extensive consultations with key stakeholders, including motor vehicle dealers, importers, and the general public, providing a forum for input on the valuation methodology. Stakeholders overwhelmingly rejected the use of Free on Board (FOB) invoice values in favor of the continued use of CRSP.
Formation of a Technical Working Team
A dedicated technical team comprising representatives from the Kenya Auto Bazaar Association (KABA), the Car Importers Association of Kenya (CIAK), the Kenya International Freight Forwarders & Warehousing Association (KIFWA), and the KRA’s Customs & Border Control Department formed the group.
Technical Meeting and Planning
The team convened on January 29, 2025, to establish Terms of Reference (TORs), identify relevant data sources (primarily Japanese Yearbooks), and define the methodology and timelines for the review.
Data Collection and Supplementation
Japanese Yearbooks served as the primary data source. They then utilized Goo-net to supplement information for vehicle models not found in the Yearbooks.
Validation and Stakeholder Feedback
Stakeholders held a validation meeting in May 2025, where they reviewed the draft CRSP list and incorporated further input.
Improved Valuation Methodology
The 2025 CRSP is based on more granular vehicle specifications, including trim level and vehicle performance, a significant improvement over the 2019 CRSP, which primarily relied on engine capacity and drive configuration.
Expanded Model Coverage
The 2025 list encompasses over 5,200 unique vehicle models, a substantial increase from the approximately 3,000 models listed in 2019. It is important to note, however, that some models are absent from the 2025 list due to their unavailability in both the Japanese Yearbooks and Goo-net databases.
The KRA’s statement aims to provide clarity and transparency regarding the revised CRSP, emphasizing its legal basis, its purpose in ensuring fair and consistent valuation, the reasons for its update, and the thorough and collaborative process used to develop it.
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