RE: IMPORTED MOTOR VEHICLE DUTY AND TAXES CALCULATION
Dear Mr. Waweru,
Firstly, I would like to congratulate and thank you for all the good work that you have done and continue to do at KRA.
I am writing to you to seek your personal intervention in the matter of import duty and tax calculation for motor vehicles.
When one imports a motor vehicle, duty and taxes payable are calculated based upon the Current Retail Selling Price (CRSP) of the vehicle. Unfortunately, KRA does not make this information clear to importers at the outset. I have looked on the KRA website and found that the vast majority of references to Customs Value indicate CIF as the value that is used to calculate duty. I have looked at FAQ and there is only one solitary sentence here that states “The CIF is also deduced from the CRSP of the vehicle” with no further clarification of what methodology is used to do this. All other information about Customs Value, including that in the Customs Department FAQ section of the website dedicated to second hand motor vehicle import (here) refers solely to CIF as the value from which duty & taxes are calculated. Additionally, the CRSP list that KRA uses to compute duty is kept secret by KRA.
I write to you to seek your personal intervention in the following way:
To urge KRA to make ALL information (especially the full CRSP list) and methodologies relating to computation of import duties readily and easily available to the public: KRA has already taken the first step towards this by publicizing the Duty Calculation Template and making it available for free download on the site. I applaud this step and encourage KRA to go the whole way and publicize the CRSP list along with any other relevant methodologies that are used to arrive at duty figures. (For example I would suggest including another spreadsheet to enable customers to calculate how to pro rate their customs value based on engine size). I believe that KRA themselves use a series of spreadsheets to capture all this information. Why not make all this available to the public?
My reasons for making this plea are as follows:
1. Efficiency: By demystifying the duty calculation and making the process totally transparent to your customers, you empower us to offer a better service to our customers. If I as a vehicle importer have all the relevant information pertaining to duty calculation, I can quickly and easily create fairly accurate quotes for my customers. Sometimes I need to create duty quotes for potential clients of up to 20 vehicles. It becomes difficult to have to keep referring to KRA to get their estimate on each vehicle. It also wastes the time of the KRA agent. It would be immensely helpful if I (and others) could have all this information at my fingertips so that I could prepare my quotes in the shortest time possible. I would offer a better service, therefore attract more clients, import more vehicles and thereby pay more tax.
2. Eliminate Corruption: I firmly believe that in all processes, transparency helps to eliminate corruption. If it is very clear to a potential importer what import duty will be charged on his vehicle, the avenues for seeking to be corrupt are closed. I have heard of quite a few cases of people who have imported vehicles with one duty figure in mind (based on their CIF) only to be presented with a much higher figure (based on CRSP). The choices open to such a person are few especially if he does not have the extra cash for additional duty to hand. Some I have heard of have had to forfeit their investments and leave their vehicles in the port because they were unwilling/unable to pay kickbacks and were unable to raise the extra money before port charges made their undertaking unfeasible. I am sure many more take the option of paying somebody somewhere something small.
I have spoken to clearing agents, fellow importers and even people who are not directly involved with vehicle import and I have as yet not heard a single compelling reason for keeping the CRSP list and other information relevant to import duty calculations secret. I have written to KRA, called KRA, even been there in person asking the same thing: for the list to be publicized or for the reasons for sticking with this policy and all they are willing to say is that “Unfortunately the CRSP list is an internal document and cannot be publicized” or words to that effect.
I therefore seek your personal intervention to bring more transparency to the process or at least clarify what reason there is for all the secrecy that exists in this process.
It is my sincere hope that my correspondence does not cause any offence and will be taken as feedback that will contribute to a better KRA and by extension a better Kenya.
I look forward to hearing from you.
Kind Regards
You've ruffled feathers really!
ReplyDeleteVery Very on point.
ReplyDeleteThe CRSP list is shared with the clearing agent who in turn share it with most dealers. But dealers and importers are ignorant of this list and rely solely on clearing agents.
It happens a number of times where the agent gives you a figure payable for a certain model, you go to the bank and prepare a bankers check and you send it to the agent, who in turn presents it and is told that the duty paid is less. I have encountered a number of times where KRA officers ask for the rest of the cash in cash and issue receipts which to me is very suspect. Mind you when you present a check paying more duty than it is payable, you dont get a refund! This is also very suspect. Its also very common to find two clearing agents with the same CRSP list giving you conflicting figures. It happens all the time. Its also common to see two different figures paid for similar models. I'll give an example. Last year I imported several Toyota RAV4s model ZCA26 which is an 1800cc for two of these vehicles we paid a duty figure of KES 325k three of them we paid figure of KES355k on each. Arguments on having paid less on another unit and was still accepted fell on deaf years. It has also happened this year with Toyota Vista 1800cc. Normally the figure paid on this one is 227,500. But the KRA officer on duty on the day we were paying for one insisted that this is a lower figure and we should pay KES 255k. On bringing the same unit weeks later, the 227k was acceptable? What is the logic here?
Something else that irks me the date of first registration of the vehicles. If you bring in a unit that was first registered say, September 2002 and another importer brings a similar model first registered say, November 2002, and we are in October, the one registered in Nov pays more duty than that one in Sep or even October by atleast 70k or as if the vehicle was manufactured in 2003! I find this very uneccessary and something that should be straightend out.
The importer with the vehicle registered in Nov chooses to wait for the few days or two weeks till its Nov and pay demurrage for those few days rather than pay more duty.
Hi Karuro. Thank you for posting this leter publicly for all to see. I applaud you for bringing this matter to public attention. Your letter is respectful, to the point and seeks to improve efficiency. Now it is my sincere hope that the press will take up this matter and make it possible for everyone to know how much duty one will pay before they even purchase the vehicle or product. This will create greater certainty in trading decisions and will ensure corruption is nipped in the bud once and for all when it comes to tax matters. I urge KRA to publicize all tax schedules so that there is no secrecy at all.
ReplyDeleteOh, do keep us informed... and did you send it by Registered Post? Or they have no incentive to reply...
ReplyDeleteAnthony,
ReplyDeleteActually some clearing agents do not seem to get the CRSP list. My agent has tried but failed to get it..yet KRA at first used to tell me that the list is disbursed to clearing agents through KIFWA..but when I called KIFWA, they had never heard of the thing.
Infact another aspect of my problem is that KRA officers (and government officials generally) seem happy to give out totally wrong information regarding processes and procedures just to get rid of people. The very first time I went to Times Towers to ask for the CRSP list, they told me that I should just use CIF; the guys exact words were "If you can prove CIF quoted is accurate then we will levy duty based on that. We cannot charge on anything else. It is only because people under declare that we have to revert to CRSP". So he advised me to keep all correspondence and any other evidence of CIF price so I could take to them to be charged duty based on that. I later found out that is an outright lie. I went back to the same guy with pictures of two cars, exact same spec, one a year newer than the other being sold for exactly same price, then his story changed. "Oh, this we would use CRSP". So had I have taken his word initially and imported under expectation of paying duty based on my CIF, I'd have been stuck!
I am also not a fan of the date of first registration business. I have found myself passing up good bargains because the month of registration would categorize the vehicle same as a vehicle from the next year. I also had a case in March where I imported a 2003 X-Trail registered in January 2003. Guess what KRA did? Produced a logbook that said year of manufacture is 2002! I had gone out of my way to find a 2003, bought the vehicle at slightly higher price than I would have bought a 2002, advertised and agreed sale price based on vehicle being a 2003 then they go and do that! Yes, officially the vehicle was manufactured in 2002, but I asked around and was told KRA usually use date of first registration as the Y.O.M.
Jellyfish,
Indeed let's hope a meaningful response is forthcoming. I wrote before and got the stock "The CRSP list is used to enable our officers to discharge their duties and is confidential and cannot be publicized at this time." or something to that effect. I often find that responses take this format yet it often helps to explain reasons for certain things. It could be that KRA have very valid reasons for choosing to operate as they do, but they simply do not feel any need to share them with us.
Coldtusker,
Will do.
Too much mystery in all this. The CFS's also have some stake in this... a couple of months back agents were up in arms against boss freight who seemed to be using values that were not in the crsp.Then they have this attitude of uta do (impunity)
ReplyDeleteThe article is head on and if KRA is serious in eradicating corruption, Waweru ought to address this. I havent imported Subarus and want to try a hand in this. How much would i expect to pay for a 2003 forester, as of Feb 2010. Any one with a list of subaru CRSPs.
ReplyDeleteFW
Folks, I just noted that KRA published a spreadsheet with CRSP as of 3rd Dec 2009. A good move. What would interest me now is calculating depreciation in time for any model.
ReplyDeleteFW
Does anyone have the current CRSP list to share it with me?
ReplyDeleteNice post, on times like these the credit for houses, cars, etc etc are just for rich people the market descriminate poor people and and the upper middle class, because the credit houses or banks have many interests and ask for high fees.
ReplyDeleteThanks
Check out www.dutycalc.co.ke. I can recommend it anytime. Easy to use and up to date CRSP
ReplyDelete