The Car Importers Association of Kenya (CIAK) has filed a case in the High Court in Mombasa seeking to stop the Kenya Revenue Authority’s (KRA) new tax formula for used vehicles, warning it will push prices up by as much as 145 per cent and hit low-income buyers the hardest.

The association, through lawyer Ngibuini Gikandi, argues that the revised structure is discriminatory, as it raises taxes on small, fuel-efficient cars mostly used by ordinary Kenyans, while offering relief to luxury vehicle buyers.

“This formula unfairly targets low and middle-income earners by increasing taxes on vehicles that are affordable and economical,” said CIAK chair Peter Otieno.

He said the changes will heavily impact cars like the Toyota Vitz, Mazda Demio, and Suzuki Swift, which are commonly used across the country for both private and commercial purposes.

On the other hand, Otieno told the court that high-end models such as the Lexus LX570 and certain Volkswagen brands will benefit from lower taxes, creating what he called a reverse progressive tax system.

“This amounts to reverse progressivity in taxation, where the wealthy are rewarded and the struggling majority are penalised,” he said.

Justice Jairus Ngaah certified the case as urgent and directed that KRA be served immediately and respond within seven days.

CIAK is also challenging the legality of the formula, saying it was introduced without any public participation or stakeholder engagement, in breach of the Constitution.

“There was no stakeholder engagement or public participation, yet the impact of this policy will be widespread and severe,” said Otieno.

Fresh valuations under the new pricing formula show drastic jumps in vehicle prices. The Toyota Passo 990cc has risen by 87 per cent to Sh2.6 million, the Nissan Vanette has doubled to Sh4.6 million, and the Toyota Probox now costs over Sh3.3 million—a 91 per cent increase.

CIAK flagged the inclusion of high-end electric and luxury models, such as the Aiways U6 electric SUV valued at Sh8.2 million and the Audi 3.0 TFSI Quattro S Line priced at over Sh16.2 million, calling the figures unrealistic and unaffordable even for used units.

“These prices are out of touch with our market. Even second-hand versions will attract duties most dealers and customers can’t afford,” said Otieno.

Importers also expressed frustration over the exclusion of widely used vehicles like the Toyota Hilux and Subaru Impreza G4 from the pricing list, saying this has created confusion in the sector.

They further accused KRA of misleading the public by initially denying the leaked valuation list before later publishing it unchanged.

“You denied the leaked list was yours, but now you’ve published it exactly as it was. So why pretend to engage?” CIAK said.

The association also criticised KRA for ignoring a proposed depreciation formula that allowed up to 85 per cent depreciation on cars older than seven years. They said this would have made taxation fairer and more manageable.

CIAK warned that if the new formula is implemented, small and medium importers could face a 70 per cent drop in stock levels, leading to job losses across the supply chain in showrooms, garages, and clearing yards.