Import vehicles into Uganda

Uganda

Uganda has recently increased its import tariff on used commercial vehicles from 7% to 25%. Used Car dealers are claiming that this is killing the sector.

Muhamed Tariq Javaid, the Used Cars Importers Association chairman, and the managing director of Coin a car depot in Ntinda, recently told a press conference at his office, that since the tariff was effected on February 1, their sales had dropped by 40%.

The dutiable Value (customs value) in Uganda is determined in accordance with The General Agreement on Trade and Tariffs (G.A.T.T) valuation method.

According to information we have received, vehicles in Uganda are taxed as follows:

• Import Duty: 25% of dutiable value as determined by UGA

• VAT : 18% of value inclusive of Import Duty (what you can call double whammy)

• Environmental tax: 20% of CIF Kampala price

• Import commission: 2% of Dutiable Value (may have increased)

• Withholding Tax: 6% of Dutiable Value

• There is an excise duty of 10% on selected cases.

There is also duty remission on some commercial vehicles. Details on these can be obtained from Uganda Revenue Authority Website.

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2009 Customs Duty in Uganda

Please note that pre-shipment inspection is required from October 2009 on. From Japan you can get JEVIC inspection but it is not clear which inspection in Thailand will be acceptable to authorities in Uganda.

Here are the customs duty on Toyota Hilux Vigo:

• Import Duty 25%
• VAT 18%
• Withholding Tax 6%

UGA Guidelines to suppliers

When exporting goods into Uganda, there are formal governmental procedures to be taken into consideration. The following document will describe the procedures that have to be followed and it will also state what is required from the supplier at different stages. Unless the following guidelines are cautiously and timely followed up there will most certainly be delays in the shipment of goods which will consequently result into delays in clearance of the shipment and delivery to the final customer.

GATT (General Agreement on Tariff and Trade) System:

URA (Uganda Revenue Authority) i.e. Uganda Customs & Excise follows GATT system for valuation of imports in to Uganda. In this system, the CIF-value up to port of entry, for the purpose of calculating applicable import duties & taxes ,is arrived at by consolidating all the costs from FOB-port of loading. Under this valuation system, the importer is expected to avail to URA all originals or copies of the documents listed below:

Shipping Documents

Airfreight Shipments original documents

1. Air Way Bill
2. Supplier Invoice(s)
3. Packing List
4. Customs export declaration / export entries from the country of exportation (w.e.f. 01/Jul/2007)
5. Importer’s TIN and VAT numbers
6. Insurance certificate, if cargo is insured
7. Evidence of payment i.e. copy of TT transfer, copy of Letter of Credit, copy of Proforma Invoice
8. Export Entries from the country of supply/export
9. Duties and Taxes Exemption Certificates, if any
10. National Drug Authority Certificate / Permit for import of drug and pharmaceuticals

Seafreight Shipments original documents

1. Bill of Lading
2. Supplier Invoice(s)
3. Packing List
4. Customs export declaration / export entries from the country of exportation (w.e.f. 01/Jul/2007)
5. Importer’s TIN and VAT numbers
6. Insurance certificate, if cargo is insured.
7. Sea Freight & Inland Freight Invoices
8. Evidence of payment i.e. copy of TT transfer, copy of Letter of Credit, copy of Proforma Invoice
9. Export Entries or Shipping Bills from the country of supply/export
10. Duties and Taxes Exemption Certificates, if any
11. 1 National Drug Authority Certificate / Permit for import of drug and pharmaceuticals.

Additional Documents required for specific imports.

Phyto-Sanitary certificates for import of agricultural products

Registration / De-registration Card of country of origin of old/used vehicles

Gift Certificates, if gifted to any organization eligible for duty free clearance

Passport of the individual for clearance of personal effects

Certificate of Origin especially for goods imported from COMESA countries

Pre-shipment Inspection : Pre-shipment inspection by any pre-shipment inspection agency is NOT required for the purpose of customs clearance of imports into Uganda.

Imports which are prohibited or restricted

Prohibited Imports:

1. Fire arms
2. Post office equipment
3. Electricity supply specialized equipment
4. Pornographic materials
5. Imports banned under international agreement where Uganda is a signatory

Restricted Imports:

1. Drugs
2. Live animals
3. Wild endangered species
4. Explosives
5. Military hardware
6. Seeds and plants
7. Specialized communication equipment
8. High voltage electric wires and transformers.
9. Cigarettes
10. Used motor vehicle tyres
11. Used motor vehicle batteries

2008 News from Uganda on Car import

New taxes blamed (from http://www.independent.co.ug/index.php?option=com_content&task=view&id=708&Itemid=2946)

Car import taxes imposed during the 2008/09 Budget speech are threatening Uganda’s clout as a regional car market, dealers have said.

They also said reduction of tax on light trucks should have included one ton pick-ups as these are mostly bought by farmers and other rural folk.     

Minister of finance Ezra Suruma increased registration tax on imported used cars from Shs 500.000 to 750.000, and Environmental tax from 10% to 20% of the original import value. Dealers are no longer allowed to import vehicles over eight years old.

“Uganda had become a regional market for East and Central Africa but the recent tax increase may choke the market,” says Mr. Mansoor Ahmed Babar, Managing Director Coin Internal Container Depot.

An 1800 c.c. car now pays import duty 25% of the value of import determined by URA, VAT of 18% computed after adding import duty, 20% environmental tax also charged on original import value of the vehicle Cost Insurance and Freight Kampala and withholding tax of 6% import value.

Mansoor said Uganda, which is now competing with Dubai and Durban in South Africa in car sales may soon fall out because of the heavy taxes.

“We are the easy market for the entire East and Central Africa,” he said, “We are selling cars to Rwanda, Burundi, Tanzania, South Sudan, and DRC.”

Mr. Abdullah Balere at Chatha Motors and Mr. Ejaz Khan Director at EL-Malik motors said the tax is negative as the buyer has to pay more.

“This won’t put us out of business as we transfer the tax to the buyer but in a way it will reduce on our sales,” says Amer Hussein at Cosmos Motors.

According to car dealers, the government should not have increased the tax because it gets high revenues from the transit licenses cars pay to transit through the country in a period of only four hours. A transit licence costs Ush 40,000.

East African Community (EAC)

Kenya, Uganda and Tanzania - members of the East African Community (EAC) trading bloc - agreed to implement a customs union from January 2005, abolishing an anti-dumping duty on imported second-hand vehicles. Kenya, the region's biggest economy, was forced to scrap a 20% anti-dumping duty on imported used vehicles as a result of joining the EAC. The other two countries had no import duties. The three Customs Administrations are to administer a common customs law, The Customs Management Act (CMA), procedures and regulations. The East African Legislative Assembly has already enacted this.

 Recently, Kenya has asked the East African Community (EAC) Council of Ministers to reinstate the 20 percent duty on second hand cars in order to protect the second hand industry from the intense competition that has resulted from the relaxation of the duty. Response to this proposal was immediate. The Kenya Auto Bazaar Association’s (KABA) Secretary Cahrles Munyori commented: "Of course they cannot introduce it (suspended duty) unless they want to go against the EAC protocol. Uganda and Tanzania do not have this duty."

On the other side of the dispute are Kenyan car manufacturers, who are, according to Munyori, trying to ensure that only cars younger than 6 years are able to enter the EAC. This would be achieved by amending the Kenya Safety Standards rule which currently requires second hand car imports to be eight years old or younger. Muyori also indicated that Uganda and Tanzania don’t have any law on their statute books that provides for the same result.

Vehicles are imported via Mombasa port in Kenya or Dar-es-Salaam port in Tanzania as Uganda is a landlocked country. Uganda is a part of EACCU. The base for computation of taxes under the EACCU is the value of the goods at first point of entry into the Community ie. Mombasa or Dar-es- Salaam.

Regional Agreements

The Common Market for East and Southern Africa

The Common Market for East and Southern Africa (COMESA) has been operating, in one form or another, since 1981.  COMESA aims to promote economic integration via the removal of barriers to trade and investment among COMESA member states. Moreover, COMESA aims to advocate for infrastructure development, and development in science and technology. Economic integration is envisaged to progress from the Free Trade Area (FTA) to an economic monetary union. The FTA became operational on 1st November 2000 with nine participating countries initially. The nine member countries that are implementing zero tariffs are Egypt, Sudan, Djibouti, Malawi, Madagascar, Mauritius, Zambia and Zimbabwe.  However in January 2004, Burundi and Rwanda joined the FTA, bringing the total number of participating countries to eleven.  

The COMESA FTA is an agreement among members not to apply customs duties or charges on goods traded amongst themselves.  The eligible goods for duty-free treatment must meet the agreed upon Rules of Origin.  Members also agree to eliminate all non-tariff barriers to trade between them.

A COMSEA Certificate of Origin is required for each consignment of goods and is obtained from the Revenue Authority in respective member countries. 

The Southern Africa Development Community

The Southern Africa Development Community (SADC) aims to promote regional integration and sustainable development in the regional community.

Members of the Southern African Development Community (SADC), comprising 14 countries, signed a Trade Protocol, which calls for the implementation of a Free Trade Area.  Each country has negotiated two reduced tariff schedules.  One schedule is applicable only for South Africa, and another schedule for all other SADC members. Zambia's implementation of her offer, effective 30th April 2001, is provided to those countries that provide Zambia with the SADC reduced tariff schedule. 

The reduction of tariffs to South Africa provide for delayed liberalization, while the schedule to other members provide for broader and faster access to the South Africa market.  The tariff schedule applicable to SADC members, with the exception of South Africa, has three categories.  Category A products are those products which go to zero-duty immediately upon implementation.  The tariff for Category B products gradually goes down to zero-duty over a period of eight years, and the tariff of Category C products reaches zero-duty twelve years after implementation.  Category C products are known as sensitive products, and include for Zambia meat and dairy products, tea, some flours, raw sugar, cement, textiles and clothing, and motor vehicles.

Plans are currently underway to establish a Free Trade Agreement by 2008, and a SADC Customs Union by 20

A SADC Certificate of Origin is required for each consignment of goods and is obtained from the Revenue Authority.