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Insurers to collect Motor Vehicle Tax under Kenya’s new proposed law

Brian Murimi by Brian Murimi
May 2, 2024
in News
Reading Time: 1 min read

The Kenyan government is planning to introduce a new levy, termed the motor vehicle tax, which will be collected at the point of insurance cover issuance.

Under the new section 12H of the Finance Bill, the tax will be payable to the Commissioner for each motor vehicle when an insurance cover is issued. This marks a departure from previous practices, aiming to ensure that all motor vehicle owners contribute their fair share to the national coffers.

The tax rate will be determined based on the value of the motor vehicle, which in turn depends on factors such as the make, model, engine capacity, and year of manufacture. The specifics of these rates are outlined in the Third Schedule of the Act.

Insurance companies are now tasked with the collection and remittance of the motor vehicle tax, which must be done within five working days after the issuance of a motor vehicle insurance cover. Failure to comply will result in a penalty of 50% of the uncollected tax plus the actual amount due.

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However, the bill also specifies exemptions to this tax. Vehicles such as ambulances, or those owned by the national government, county government, Kenya Defence Forces, National Police Service, National Intelligence Service, or individuals exempt under the Privileges and Immunities Act, will not be subject to this tax.

The introduction of this tax is expected to bolster the government’s revenue while ensuring that public service vehicles and those belonging to security agencies remain unburdened by additional financial obligations.

The move has been met with mixed reactions, with some Kenyans expressing concerns over the potential increase in insurance premiums.

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Brian Murimi

Brian Murimi

Brian Murimi is a journalist with major interests in covering tech, corporates, startups and business news. When he's not writing, you can find him gaming, watching football or sipping a nice cup of tea. Send tips via bireri@thesharpdaily.com

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