Motorcycles belonging to boda boda operators parked outside Nyayo Stadium in Nairobi in July 2022. Police arrested four suspects and recovered more than 50 dismantled motorcycles in Eldoret over the weekend.
Imported motorcycles costing Sh130,000 and above are set to become more expensive after the National Treasury proposed to raise excise duty on a two-tier system featuring the current flat rate of Sh12,952 or a new proposed rate of 10 percent of the unit's value, whichever is higher.
The proposal to introduce the second option of 10 percent excise duty is contained in the Finance Bill, 2024 that is expected to be tabled in Parliament this month for debate and passage before the end of June.
“The first schedule to the Excise Duty act is amended by deleting…the corresponding rate of excise duty and substituting thereof the following new description and corresponding rate of excise duty … tariff 10 percent of the value or Sh12,952.83 per unit whichever is higher,” the Bill reads in part.
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The proposal will affect motorcycles priced at Sh130,000 and above and which will see their excise tax payable exceed the current flat rate based on the 10 percent to be introduced.
This move, if adopted by Members of Parliament, is likely to affect most motorcycles with an engine capacity of 100cc or more and in turn push them out of the reach of many Kenyans.
Currently, imported motorcycles attract an excise duty of Sh12,952 per unit with the exception of motorcycle ambulances and those locally assembled.
The rising popularity of motorcycles over the years has been linked to more Kenyans using them for the popular boda boda business or courier services, a trend that has made the sector an easy target for the government in the pursuit of increased tax collections.
The proposed new tax comes at a time when purchases of motorcycles declined to the lowest levels in at least 14 years as high prices made the units costlier.
Official data shows that new motorcycle registrations dipped by 52.6 percent to 62,338 last year from 113,513 registrations made in 2022.
Last year’s registration numbers for the units was the lowest since 2008 with industry experts attributing this to rising prices.
The new tax, if adopted, is likely to tilt the scales in favor of firms that are locally assembling the units, as imports will become even costlier.
The firms have been targeting the growing demand as more Kenyans eye the units to set up the easy to start boda boda business amid high levels of unemployment.
The popularity of boda bodas has been attributed to their ability to navigate traffic snarl-ups in the cities besides being relatively cheaper compared to cars.
The Treasury has in the past failed to impose new taxes on imported motorbikes, most recently in 2021 when lawmakers rejected a bid to raise the tax to 15 percent. Members of Parliament then argued that the new tax would make motorbikes costlier and hurt the boda boda industry.
