Finance Bill: Vehicle owners to pay annual tax of up to Sh100,000

The Finance Bill of 2024 has introduced a Motor Vehicle Tax, set at 2.5% of a vehicles market value, as outlined by the government. This tax aims to establish a consistent revenue source to fuel the governments ambitious development endeavors. According to the bills provisions, the tax will vary between Sh5,000 and Sh100,000, payable upon issuance of an insurance cover. The assessed amount considers factors such as the vehicles make, model, engine capacity, and year of manufacture.

Insurance providers are tasked with the responsibility of collecting and remitting the tax within five working days of policy issuance. Adherence to this timeframe is crucial for efficient tax collection, with penalties imposed on insurers failing to comply. Penalties for non-compliance include 50% of the uncollected tax plus the actual amount owed.

However, specific exemptions apply to certain vehicles, such as ambulances and those owned by governmental bodies like the Kenya Defence Forces and the National Police Service, as well as individuals protected under the Privileges and Immunities Act Cap. 179.

To ensure accurate assessment and collection, the Commissioner has the authority to establish guidelines for determining motor vehicle valuations.

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