(a) Where an employee is provided with a motor vehicle by his employer he shall be deemed to have received a benefit in that year of income equal to the higher of:
(i) such value as the Commissioner may from time to time determine*; and
(ii) the prescribed rate of benefit.
(b) For the purposes of subparagraph (a) – ‘prescribed rate of benefit’ means the following rates in respect of each month:
(i) in 1996 year of income 1% of the initial capital expenditure on the vehicle by the employer;
(ii) in 1997 year of income 1.5% of the initial capital expenditure on the vehicle by the employer; and
(iii) in 1998 and subsequent years of income, 2% of the initial expenditure on the vehicle by the employer.
Note:
* – Commissioners value (by CC’s) are usually lower than the prescribed …
e.g., In 2017 Commissioners rate for 2400cc was Kshs.8,600 per month, compared to Kshs.50,000 (2% per month of Kshs.2,500,000 purchase price)