KAMPALA, Uganda — A wave of uncertainty is sweeping through Kampala’s car bond yards as industry players express growing fears that the government may introduce new or higher taxes in the upcoming financial year.
After a rare period of relative stability in vehicle import duties, dealers warn that any further fiscal pressure could push car ownership beyond the reach of the average Ugandan.
Currently, importing a vehicle into Uganda involves a complex web of charges calculated against the Cost, Insurance, and Freight (CIF) value.
For many buyers, the discovery that taxes can equal or even exceed the original foreign purchase price comes as a shock.
The existing tax structure includes:
- Import Duty: 25% to 35% (depending on engine size).
- VAT: 18%.
- Withholding Tax: 6%.
- Excise Duty: Approximately 10%.
- Environmental/Age Levy: An additional 20% for vehicles older than eight years.
Combined, these levies typically inflate the final cost of a used vehicle by 40% to 60% by the time it clears customs.
Market Sentiment: “Change is Coming”
While the government has not yet issued formal announcements, dealers sense a shift in policy as the state looks to bolster domestic revenue for infrastructure and environmental compliance.
George Ateka, a prominent Kampala-based importer of vehicles from Japan and the UK, believes the current tax holiday is nearing its end.
“When taxes stay the same for too long, government eventually adjusts,” Ateka noted. “We haven’t seen a major increase recently, but honestly, we don’t expect this stability to continue.”
This sentiment is driving a surge in early imports as buyers attempt to beat the next budget cycle. Susan Musiime, a dealer operating in a city bond, reported a spike in inquiries from anxious customers.
“People are asking us every day whether they should import now or wait,” Musiime 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.”
The targeted “Age Levy”
Clearing agents suggest that if the government seeks quick revenue without a major political backlash, they will likely target environmental penalties.
By raising the age-related levy on older units, the state can increase its coffers under the guise of promoting “green” transport, even if it makes affordable entry-level cars more expensive.
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However, dealers argue that external factors—such as a volatile US dollar and rising global prices—are already doing the government’s work.
“If nothing changes in the next budget, people will relax,” said Moses Kizito, another city car dealer. “But if even one new levy is added, importing a car will become even harder for ordinary Ugandans.”
Official silence from URA
When approached for clarity, officials from the Uganda Revenue Authority (URA) remained tight-lipped.
Spokespersons declined to speculate on potential reviews, emphasizing that all tax policy changes are strictly handled through the national budget process.
They advised the public to rely solely on official government publications once the budget is read.
As the 2026/2027 fiscal planning begins, the motor trade remains one of the most vulnerable sectors. For now, the rates remain unchanged, but for many in Kampala’s bond yards, the clock is ticking.
