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Kampala, Uganda | THE INDEPENDENT | Effective July 1st, 2022, used motor vehicles between nine and 12 years from the date of manufacture will be warehoused for a period not exceeding six months unlike in the past when they would take nine months. According to Uganda Revenue Authority-URA, vehicles older than 13 years will undergo clearance at the first point of entry into the East African community.
The Commissioner-General John Musinguzi, says the decision arises from their meetings with second-hand car dealers held on May 27th, 2022. According to Musinguzi, URA is cognizant of the effects of global inflation on businesses, which calls for a review of the changes in the warehousing regime.
“Considering the current economic landscape, and the geo-political that has caused the creeping inflation in the country, it is imperative that URA adopts a more gradual but progressive approach to the restriction of warehousing of used motor vehicles,” Musinguzi explained to journalists at a news briefing.
The decision follows the stalemate between used car importers and URA over the April 1st, 2022 notice requiring all imported cars aged nine years and above to undergo customs clearance at the first point of entry into East Africa that was scheduled to start July 1, 2022. The dealers petitioned the Authority for redress fearing the heavy losses they might incur if the decision is implemented.
In their May 5th, 2022 petition to the tax body through the Used Car Dealers Association of Uganda, the importers revealed that they re-export up to 5,000 used vehicles to South Sudan, the Democratic Republic of Congo, and Burundi, which would be affected by the new measures.
The association chairperson, Marvin Ayebale said that 83% of the re-exported motor vehicles fall in the nine to 15-year category, saying the decision would affect business worth close to Shillings 120-billion since vehicles intended for re-export would have to be cleared at the ports. They also noted that clearing vehicles at the point of entry in East Africa would require huge capital, which most of them don’t have.
Some of the used car dealers interviewed by URN have welcomed the new measure describing it as a sigh of relief. Nelson Mpaata, a used car importer at Mpatanel enterprises told URN that the new measure is a little bearable though it is not the best.
“At least we can move with this but the tax body has to review taxes on used vehicles base year if this sector is to settle very well,” Mpaata demanded. Kaggwa Mayanja, another importer of used cars who manages a bonded warehouse, says that URA has only tightened the situation rather than aiding business.
“Removing an extension of the warehousing period of these vehicles means we will make fewer sales because purchase power is low and customers drag a lot before making buying decisions, many of which exceed 9 months” Kaggwa explains.
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