KAMPALA. Importers of used cars have requested government to suspend 50 percent environmental tax slapped on the second hand vehicles in July 2015.
According to Used Cars Dealers Association Uganda Ltd, chairman, Malik Azhar, the tax is suffocating used car businesses in the country to the extent that some of their members have started relocating to other countries like Zambia and South Sudan where the business environment is favorable.
“On average our members used to sell 15 to 20 cars per month before the environment tax. But now days, we sell two to three cars a month and to make matters worse, some of our clients take these cars on loan. We ask government to suspend this tax for a meanwhile so that the stakeholders can meet and have a discussion,” Malik said.
General Manager, 3SK Investment Ltd, Mr. John Ssali said car importers have been contributing over Shs1 trillion annually but with the new tax in place, collections for this financial year may be miserable.
Faisal Khan, member of the car dealers, said over 10,000 cars of their members risk being auctioned in couple of months by Uganda Revenue Authority (URA) if the tax is not reviewed.
“When we import a car, a grace period of nine months is given to pay tax or else URA auctions the vehicles. One can redeem the car to be dropped from the auction list by paying three percent of the car’s value and only given another seven days to clear the tax. We are worried that many of our cars may be auctioned,” Khan said.
They also appealed government to review the US$500 car inspections tax imposed on them before importation.
When contacted on phone, Minister of Finance Planning and Economic Development Matia Kasaija said the tax was a deliberate move to ban second hand vehicles from entering Uganda.
“We have no apologies for that, why should they import cars to pollute our environment? Government is inviting companies to come and assemble cars locally. So we have a Chinese company that is going to assemble cars locally. We have given the firm land and tax incentives,” he said.