This Is Why Importing Second-Hand Cars Is Expensive

The Tanzania Revenue Authority (TRA) has commented on increased costs of some imported used vehicles in early January 2021, saying this was the result of routine valuation process that based rates on the current actual value of the vehicles in the global market.

TRA said it normally revises the rates after every three months to update the pricing data for vehicles. This may lead to higher or lower rates charged, depending on vehicle market prices.

The authority said it visits sources, including web sites, of companies selling vehicles for updates.

TRA’s taxpayer service and education director Richard Kayombo told journalists that tax paid on the imported used vehicles was calculated on the Used Motor Vehicle Valuation System, an online portal that’s run by the authority.

“When we update dutiable values of used motor vehicles, the charges change. For some vehicles, the tax may go up, while for some it may go down – thus affecting the price levels,” he said.

Mr Kayombo said TRA also charges excise duty based on age, whereby a vehicle’s age is calculated according to the calendar year. For instance, private cars aged eight to nine years are subjected to an excise duty of 15 percent while for a car that is aged more than 9 years is charged at 30%.

“This means if you ordered a private used car for nine years in 2020 and it arrives in Tanzania in 2021, it will be charged at 30 percent and not 15 percent which was supposed to be the rate if the car were to arrive in the same year of 2020.

“For that reason, importers of cars of the same age who ordered cars in 2020 and it arrived in 2021, it is clear that there would be an increase of tax,” he said.

According to a TRA statement to Mwananchi the vehicle valuation system complies with the country regulations and the prices are posted on the authority’s web site to help importers calculate the amount of tax they would be needed to pay once the vehicle reached the country.

The updating of the (Customs CIF value) for second-hand imported cars raised concern among stakeholders especially dealers and retailers who claimed that the change in tax caused by this update could affect their businesses.

“For cars like IST whose CIF was valued at $1,800 is now at $2,500 – which means its tax goes up as the dutiable price would have increased,” said Hendh Razack, a car dealer in the city.

Saidi Anishk – another car dealer – said they started noticing price changes from the beginning of this year, making retailers worried.

Citizen