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URA will not reduce taxes on imported used vehicle

 14 Jul, 2016 Uganda Revenue Authority (URA) will not reduce taxes levied on imported used vehicles. This was revealed by the Assistant commissioner for trade at URA, Moses Kisaale.

Importers through the Uganda Manufactures Association (UMA) had asked the authority to reduce taxes, claiming they are high and failing their businesses.

It is estimated that 28,000 vehicles come into the country daily.

Kisaale said reduction of taxes is beyond URA because that was a legislation set by government to ensure that few used vehicles come into the country to protect the environment.

One of the taxes is the environment levy which protects the environment through charging high taxes on imported used vehicles.

Environment experts explain that used vehicles give off dangerous fumes like carbon monoxide, a product of fuel that is not completely burnt. Such gases can harm the respiratory system and cause cardiac diseases.

While vehicles coming into the country below five years don't attract levy, those older than five attract a 35% of the cost of insurance and freight of that particular vehicle.

If it is 10 years and above, the levy will be 50%. Therefore before importing a used vehicle, one must weigh the profits from such a vehicle, explained Kisaale.

For example, if you are going to import a vehicle worth $10,000 dollars, you might pay $15,000, bringing the total cost of one vehicle to $25,000. This includes the cost of insurance and freights, he added.

According to Kisaale, Uganda is one of the countries that have no regulation on the age of vehicles coming into the country, unlike Kenya and Tanzania.

Tanzania has no age limit on used vehicles being imported but taxation of a car may change depending on the age of the vehicle. For example if a vehicle is older than 10 years, higher taxes are applicable.

In Kenya, for one to import a used vehicle it shouldn't be older than 8 years while in Uganda, there is no such a measure.

"We still have vehicles of 1974 coming into the country and the latest clearance is of a bus that was manufactured in 1986," said Kisaale.

He was addressing manufacturers during the 8th annual Health Nutrition and Safety Fair organized by UMA at the UMA show grounds on Thursday.

Possible interventions

Currently URA is undertaking a study to introduce a ban on a certain age of a vehicle. However, importers can appeal to government to reduce taxes on brand new vehicle so that they are affordable.

"Imagine if a brand new vehicle didn't have import duty or if the import duty was reduced to like 10%, many of us would opt for a brand new vehicle as opposed to the used ones," said Kisaale.


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