By Vanguard reporter
Kampala– Importers of used cars have petitioned Uganda Revenue Authority (URA) over collapsing business in the sector due to ‘unfair’ tax policy. According to the former chairman of Used Cars Dealers Association Malik Azhar, the cost of importing cars has tripled as most shipping firms have diverted to China where there is lucrative business.
In June 2018, Parliament passed a law that banned importation of cars manufactured fifteen years old. The law, the government said, sought to reduce toxic emissions that are associated with most used cars. The law took effect on October 1, 2018 with a six grace period extension of up to March 2019 when dealers had to dispose of cars that were still in transit and bonds.
“Before the ban, we used to pay US$2000 for a forty feet container that brings in five cars, now it costs US$6000. Most importers have now resorted to loading cars openly on ships which is cheaper but the demand is high,” he said.
Adding, “This has shot up the demand for shipping cars. One has to book three month before to get space on a ship. We appeal to URA to consider reviewing its tax policy that has drastically affected our business. We do provide employment to Ugandans and pay taxes, we need a just tax policy for us to be in business so as to meet our tax obligation.”
Used motor vehicle imports for the year ended 2019 declined by 12.8 per cent mainly due to a ban on cars older than 15 years.
According to data sourced from Uganda Revenue Authority, a total of 42,681 units worth Shs1.3 trillion were cleared into the country in 2019, which was a slight decline from the 48,966 units (Shs1.31 trillion) cleared in 2018.
The drop indicates that used vehicle imports in 2019 were less by 6,285 units, which saw the government lose close to Shs6b.
However, the ban has eaten into URA revenue collections with the tax agency realizing Shs388b in 2019 from used vehicles compared to Shs394b realised in 2018.
The levy also forced an increase in prices and competition among some categories of cars including Spacio and Premio, among others, which, according to Mr Malik could have resulted in a drop of imported units.
When contacted, Mr Ian Muhimbise Rumanyika, URA’s acting assistant commissioner of public and corporate said the request will be considered at policy level.