We Will Eliminate All Taxes For First 100,000 Electric Cars, William Ruto Says

• President William Ruto said the bold initiative is part of Kenya’s commitment to environmental sustainability and technological advancement
• Ruto's statement comes at a time when there is a storm about taxes in Kenya, especially after the Finance Bill 2024 proposed several tax increments, including on bread
• The bill has also proposed a motor vehicle tax, the tax, according to the bill, will be 2.5% of the vehicle's value

President William Ruto has announced the elimination of all taxes for the first 100,000 electric cars in the 2024-2025 financial year budget.

Ruto made this announcement while in the US, where he is on a state visit hosted by his US counterpart Joe Bien.

"We also lead in e-mobility. You heard the Ambassador make that statement. We host over 30 e-mobility companies and attract regional players like US Electric vehicle leader Rivian. And just to contextualise this, in this year's budget, we will eliminate all taxes for the first 100,000 cars that are powered by electric energy," said Ruto.

Why Ruto announced removal of taxes on electric cars

Ruto's announcement followed calls by electric vehicle (EV) manufacturers in the country to have 15% taxes removed on EV components.

During the E-Mobility Conference organised by Kenya Power in April 2024, the Electric Mobility Association of Kenya (EMAK) urged the government to:

• Remove the 10% import duty on electric bicycles and motorcycles
• Remove import duty on three-wheelers, passenger cars and trucks
• Remove 25% import duty on EV charging infrastructure
• Remove 16% VAT and 10% exercise duty on electric three-wheelers
• Remove 25% import duty on lithium-iron batteries
• Remove 16% VAT on battery charging and leasing service

The association said it targets zero tax from the government to grow the sector to 800,000 EVs by 2028.

However, the National Treasury proposed to impose VAT on electric bicycles, motorcycles, buses, and solar and lithium-ion batteries, among other taxes, in the Finance Bill 2024.

Finance Act 2023 taxes

In 2023, the government removed VAT and excise duty on electric bicycles and motorcycles under the Finance Act 2023.

The state also removed VAT from electric buses and lithium-ion batteries.

Ruto officially assented to the Finance Act 2023 on June 26, 2023, introducing a raft of taxes that hit Kenyans hard.

Proofreading by Nyambura Guthua, journalist and copy editor at TUKO.co.ke