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After years of stability, is Uganda’s car import tax regime about to change?
Kampala, Uganda | THE INDEPENDENT | Importing a car into Uganda has remained costly even though most headline vehicle import taxes have not been raised for several years, according to industry players.
However, car dealers and clearing agents say the long period of stability may not last much longer, as government looks for new revenue sources ahead of the next budget.
While officials have made no formal announcements, anxiety is growing across Kampala’s car bond yards that new levies or higher rates could be introduced in the coming financial year.
What importers are paying today
Taxes on imported vehicles are calculated using the CIF value , the cost of the vehicle, insurance and freight.
The combined charges typically include import duty, value added tax (VAT), withholding tax, excise duty, infrastructure levies and age-related penalties for older cars.
In total, these charges can add 40% to 60% to the original purchase price of a used vehicle by the time it is cleared.
Import duty generally ranges between 25% and 35%, depending on engine size and classification.
VAT is charged at 18%, withholding tax at 6%, excise duty at about 10%, while infrastructure and declaration fees add a further 2.5%. Vehicles older than eight years often attract an additional age or environmental levy of around 20%.
Dealers sense change coming
Car dealers say that although official rates have remained stable, the steady addition of smaller levies in recent years suggests government may be preparing the ground for further changes.
“When taxes stay the same for too long, government eventually adjusts,” said George Ateka, a Kampala-based car dealer who imports vehicles from Japan and the United Kingdom.
“We haven’t seen a major increase recently, but honestly, we don’t expect this stability to continue.”
Another dealer Susan Musiime operating at a city bond yard said buyers are increasingly rushing to import before the next budget cycle.
“People are asking us every day whether they should import now or wait,” she said.
“There is a feeling in the market that taxes could go up, especially on older cars. Government needs money, and vehicles are easy to tax.”
Clearing agents also warn that age-related levies are likely to be the first area targeted if changes are made.
“If government wants to discourage old cars, the easiest thing is to raise the age levy,” said one customs agent. “That alone would increase revenue without touching VAT or import duty.”
Rising costs without new hikes
Even without new tax increases, importers say costs have climbed steadily due to a stronger U.S. dollar, higher global vehicle prices and stricter enforcement of existing rules.
Many buyers are surprised to find that taxes can equal — or even exceed — the price paid for the vehicle abroad, particularly for older units.
URA remains tight-lipped
Officials at the Uganda Revenue Authority declined to comment on whether vehicle import taxes could be reviewed in the next financial year, saying tax policy matters are handled through the national budget process.
URA officials contacted for comment said they were not in a position to speculate on future tax measures, and advised importers to rely only on officially published rates and budget announcements.
Watching the next budget
With government under pressure to raise domestic revenue for infrastructure, transport regulation and environmental compliance, industry players say the motor vehicle sector remains vulnerable to new taxes.
For now, Uganda’s vehicle import tax regime remains unchanged — but uncertainty is growing.
“If nothing changes in the next budget, people will relax,” said Moses Kizito, a car dealer. “But if even one new levy is added, importing a car will become even harder for ordinary Ugandans.”
As the next financial year approaches, many in the motor trade are asking the same question:
After years of stability, is Uganda’s car import tax regime about to change?
