Car Dealers Point Finger At KRA For Scaring Wealthy Clients Away
The years 2018 and 2019 have seen a series of Kenya Revenue Authority crackdowns on illegal goods smuggled through our ports. What has raised eyebrows the most though is the number of luxurious cars impounded within a short period of time. The taxman has since been on the backs of high spenders and luxury lovers in Kenya. Now the car dealing industry is blaming KRA for causing a 43% cut on luxury cars sold following fear that the taxman will scrutinize clients’ bank accounts by obtaining personal details availed during a car purchase deal.
KRA is, has come out to say that the luxury spending by these particular individuals does not reflect on their tax remittances. As a result, most of these affluent individuals have therefore opted to drop the luxury taste of cars to avoid rubbing shoulders with the revenue authority. According to the Kenya Motor Industry Association, unit sales for new cars has also fallen following the scrutiny.
For example, Bentleys and Porsches distributed by different franchises although under one Multiple Group, have fallen in demand and in orders in the last year. In fact, unit sales for Porsches dropped from 41 a year to 22 whereas Bentley, Landrover, BMW, Mercedes among other high-end cars have experienced a big drop. Jaguar sold 7 units compared to 21 last year.
A sneaky KRA
Since the capping of the age of cars brought into the country, the government went ahead to put restrictions on the car dealing business; the car transfer process and payment method. Early this year, many importers who in most cases are car dealers opted to abandon high-end vehicles at the Mombasa port after KRA slapped them with high duty charges after reviewing its valuation schedule based on the Current Retail Selling Price formula. This is after threats to auction the cars by authorities were actualized leading to major business losses. According to dealers, the duty tax almost matches the buying price of vehicles, therefore, beating the business sense of it.
Many have since kept off importing and are now dealing with local second-hand vehicles. However, some Individual importers, as well as car dealers in the country, churned out a way to bring in high-end vehicles without having to deal with the taxman in collaboration with small traders and government officials from various agencies to import high-end cars under the disguise of other goods. Containers whose goods were registered under different commodities were impounded containing luxury cars illegally ferried into the country.
64 Range Rovers, 94 Mercedes Benz and 224 Toyotas, 22 Nissans, one Porsche, 26 Subarus, four Volkswagens, and Two Volvos were confiscated for suspicious registration which explains why KRA has moved to individuals despite restricting car dealers who make a big number of importers.
Today, the revenue authority has opted to use personal details to smoke out tax offenders surpassing brokers and dealers which completely cripples the purchase of high-end cars without a good KRA record except for the few loopholes. A big chunk of dealers who highly depend on company orders and individual ones are currently out of business considering state orders are controlled and specific to a dealer in order to cut on overspending and debt accumulation.