Uganda has made an about-turn and relaxed the tough import conditions it has set for vehicles aged over nine years entering its market from July, dealing a setback to Kenyan dealers who had hoped to benefit from curbs on the sale of such automobiles.
In April, the Uganda Revenue Authority (URA) issued a directive that imports of vehicles older than nine years be cleared under the East Africa Community’s Single Customs Territory (SCT)– which allows members of the bloc to jointly collect customs taxes– from July 1, 2022.
However, in a twist that dims the hope of car dealers in Kenya, URA backtracked on its earlier directive saying the rule will now apply to vehicles aged more than 13 years.
“The general public is hereby informed that effective July 1,2022, motor vehicles that are 13 years and above from the date of manufacture shall no longer be cleared under the warehousing system,” URA said in a June 2022 notice as quoted by Nation.
The latest directive hands Uganda dealers a window to import old cars that often end up in the Kenyan market— effectively distorting business.
“The earlier directive by URA had given us some hope of progressively ending the smuggling menace, especially of models such as Toyota Spacio, Toyota Wish, Toyota Premio, and Toyota Alphard. The new directive kills our hope” Phillip Mulei, a motor vehicle dealer in Nairobi told Smart Business.
Uganda’s reversed import directive had been seen as a measure to bring the country’s car age limit closer to the EAC resolution that had recommended the slashing of the age limit for imported cars to five years by 2021.
In 2018, Uganda passed a law limiting the importation of vehicles manufactured more than 15 years ago.
Kenya has been pushing regional countries towards adopting the EAC recommendation and has already announced plans to limit the age of used vehicles with engine capacity above 1500cc imported to five instead of the current eight years.
Tanzania allows imports of cars as old as 10 years while Burundi, Rwanda, and South Sudan, on the other hand, have no formal age limits for used cars. The different set of age limits within the region has fuelled tax and regulatory arbitrage to ship in cheaper and older cars.