- An employee who has been provided with a motor vehicle is deemed to have received a benefit, hereinafter referred to as “motor vehicle benefit.”
- The value of the motor vehicle benefit chargeable on the employee in each month shall be the higher of;
- the rate determined by the Commissioner as contained in Appendix 7 of the Employers Guide- Form P7, and
- two per cent of the initial capital expenditure incurred by the employer on the vehicle
- Notwithstanding paragraph 2 above, where there is “restricted use” of such motor vehicle, the Commissioner may determine a lower rate for the purposes of computing the benefit if satisfied of the fact. Proof of restricted use shall be provided by the employer based on among other considerations, the nature of the employee’s duties and the controls reasonably exercisable over the motor vehicle’s usage.
- Where an employer intends to claim restricted use of a motor vehicle provided to an employee, the employer shall maintain a documented policy containing details of;
- the cadre of employees entitled to be provided with motor vehicles;
- the permitted usage to which the motor vehicles may be put;
- the nature of expenses if any, to be met by the employees or the employer in respect of the vehicles;
- evidence of how usage is monitored and controlled;
- whether the vehicles are self or chauffer-driven.
Provided that the Commissioner may at any time, where he considers appropriate, require the employer to furnish him with the following information;
- the list of employees to whom motor vehicles have been provided,
- the make, registration, engine capacity and cost of the vehicle provided
to any employee,
- the extent to which the vehicle is shared by the other employees,
- where prior authority of use is required, the designation/rank of the person holding that authority,
- circumstances under which the vehicle is used during non - official working
time such as weekends and public holidays.
- Employees having access to transportation facilities through motor vehicles not specifically allocated to them (i.e. pool vehicles) shall be deemed to have received transport benefit chargeable to tax provided the aggregate value of the benefit exceeds shillings three thousand (sh.3, 000) per month. Such transport benefit shall be calculated based on the cost of maintenance of such motor vehicles.
- For the purposes of these guidelines, regard shall be had to Section 37 of the Act and the Income Tax (PAYE) Rules.
- The provisions of the Act relating to fraud, under declaration of tax, failure to furnish any information required, failure to maintain records or failure to furnish returns, shall apply with respect to motor vehicle benefit.