URA make Uturn on Warehousing of old motor vehicles Ban

The Uganda Revenue Authority (URA) reviewed its earlier directive to remove motor vehicles dating nine years old and more from the warehousing regime to adopting a one-year
reduction approach on warehousing regime for those motor vehicles.

The URA’s initial directive on motor vehicles dating nine years or more was meant to avert revenue loss which
was caused by warehousing of motor vehicles for a period up to nine months.

“With the new measure, which will take effect from 1
st July 2022, motor vehicles 13 years old shall pay taxes while at the first ports of entry into the East African Community.” The Commissioner General of the tax collecting body, John Rujoki Musinguzi, said last week Friday during an engagement with used car dealers at the authority’s headquarters at Nakawa Kampala.

He also resolved to reduce the warehousing period of motor vehicles aged nine to 12yrs, to only six months without extension. The current practice allows an importer to warehouse such vehicles up to nine months.

Musinguzi went ahead and told the car dealers, that URA recognised the effect of the current
global inflation, which is still affecting businesses in all the sectors, the approach to adopt changes in the warehousing regime ought to be reviewed.

“Considering the current economic landscape and the geo-politics that has caused creeping
inflation in the country, it is imperative that URA adopts a more gradual but progressive approach to the restriction of warehousing of used Motor Vehicles.” Mr. Musinguzi stated

The notice that was issued on the April 1st 2022, the tax authority directed all importers of cars dating 9 years old or more to undergo Customs clearance and pay taxes at the port of entry into the East African Community (EAC) before such vehicles are allowed into the country. This was to take effect on July 1st 2022 for private motor vehicles excluding commercial ones.

Consequently, on 5th May, 2022, the importers, under their umbrella body, Used Car Dealers Association of Uganda, petitioned the URA Commissioner General expressing dissatisfaction with the directive.

In their petition, used car dealers were concerned about the directive’s impact on the re-export business. They noted that at least 5,000 vehicles are re-exported to South Sudan, Democratic Republic of Congo and Burundi.

Marvin Ayebale, the association spokesperson, said 83% of the re exported motor vehicles fall in nine to 15-year category.

He further more stated that if the URA directive is adopted, a close to UGX 120-billion business faces a threat since vehicles intended for re-export would have to be cleared at the ports.

The used car dealers welcomed the new resolution by the Uganda Revenue Authority on warehousing without extension and said it was a more accommodative measure as opposed to earlier directive that was entirely abolishing warehousing.

About The Author

Gateway News

Leave a Reply

Your email address will not be published. Required fields are marked *