Car buyers have been hit hard following the approval of a 35 per cent import duty on motor vehicles by the East African Community (EAC).

The blow is the latest one on the industry already reeling from the effects of a depreciating currency and high cost of loans.

Car buyers will now have to pay 35 per cent import levy after the EAC Council of Ministers approved a review of the import duty from the current 25 per cent.

“Kenya to stay application of the EAC common external tariff rate of 25 per cent and apply the duty of 35 per cent,” said the EAC gazette. 

This will result in double-digit price increases for imported cars, including those carrying 10 or more passengers, station wagons, racing cars, and those used for transporting goods, among others. This comes hot on the heels of a fuel price review that saw prices rise by Sh13 for petrol in Nairobi following the EPRA announcement to reflect the Finance Bill 2023.

New move by the EAC effectively means that cars brought into the country will now sell for more money locally than they would in comparable countries in the region, such Uganda and Rwanda.

In order to support tax policies used by the President William Ruto’s administration to earn an additional Sh211 billion in revenue this fiscal year, Kenya requested that higher taxes on household appliances like mobile phones and televisions be maintained for an additional year.

Ezekiel Nibigira, minister in charge of EAC affairs in Burundi and the head of the EAC Council of Ministers, published the notice.

Dealers predicted that the increased 35 per cent import charge on both used and new imported cars will result in hundreds of shillings more in price increases, on top of the already higher prices brought on by the weakening shilling and growing cost of borrowing.