URA gives car importers more time to clear taxes

The car business in Uganda mainly depends on old cars imported from Japan. File photo

Kampala-Uganda Revenue Authority (URA) has given a three months extension to importers to clear taxes for cars which have overstayed in bonds.

According to the custom laws, vehicles in bonded warehouses that haven’t paid taxes within 270 days, are supposed to be auctioned off to recover the taxes.

The dealers through their organisation, Associated Motor Dealers-2015, had sought an extension, which URA granted.

In a response written by URA commissioner customs Dicksons Kateshumbwa which Daily Monitor has seen, time for payment of taxes for vehicles in the bonds has been pushed to December 20 this year.

“The circumstances under which your members find themselves is rather regrettable; however despite the odds, the partnership between yourselves and customs has continued to improve. Your request has been granted in line with Section 60(3) of the East African Community Management Act, 2005, however this is restricted to the listed number of vehicles,” Mr Kateshumbwa wrote.

However, the authority said the extension will only apply to vehicles that were listed by the association of car dealers.

Recently, environmental levy for used cars that are 10 years old or more, increased from 20 per cent to 50 per cent. The same levy was also increased for used cars that were produced five years ago from 20 per cent to 35 per cent.

The high taxes have seen car sales drop as dealers have been forced to pass the taxes to their clients through increased prices.

Mr Marvin Ayebale, a dealer in imported cars, said the increased taxes have had a multiplier effect on the general vehicle market.

Calculating tax
The four key factors used to calculate taxes include

The Customs Value (CIF Value): URA releases fixed customs values almost every year.
The Engine Size: URA levies duty on engine size – the bigger the engine, the greater the duty.
Manufacturing age: All imported cars above 8 years from the current year are levied an environmental penalty tax of 20% of the value of the car. However, in addition to computation of taxes, newer cars are valued higher, and therefore attract a higher overall tax than old ones.
The monthly exchange rate: URA values the cars for tax purposes in US dollars to obtain the customs value in shillings.
Registration fees. This fee is around Shs1.2m for a standard car and Shs1.7m for heavy engine cars. (www.carpassport.ug)