Uganda has hiked import duties by 25% on all electric vehicles coming into the country, a big jump from 0% in the past fiscal year. This hike is in response to the rise in electric car imports in the East African country county — from 26 units in the 2022/2023 fiscal year to 420 units the following year, according to data from the Uganda Revenue Authority.
The hike has also solicited complaints from car deals about how the unpredictable tax regime in the country makes planning hard, they warn that the new import tax will scare away investors.
“Electric cars are already expensive,” said Benon Mascot, Deputy General Manager, Sales and Marketing, Motorcare Uganda Nissan, suggesting, that he projects that because of the rise in Import duties, e-vehicle sales which were starting to pick would see a decline.
The hike has pushed up the cost of a Nissan Leaf Car at Motorcare Uganda by over 25% from USh204.3 million ($55,000) to USh255.3 million ($68,750), the most affordable model in Kampala.
The Ugandan government reinstated the tax tariff to cut down on the importation of EVs and instead focus on the internal production of these eco-friendly vehicles. The Director of Economic Affairs, Moses Kaggwa, notes that industrial development needs import substitution and specific sector protection calls for periodic reviews.
In response to this, the government-owned car Kiira Motors Corporation is producing more electric buses to be deployed on urban roads and for the export market, in line with the plan to transition from traditional gasoline-powered cars to electric cars that produce zero tailpipe emissions.
According to Ugandan Parliament Speaker Anita Among, companies manufacturing electric vehicles, electric batteries, or electric vehicle charging equipment or fabricators of the frame and body of an electric vehicle that employ 80% of Ugandans will not pay Stamp Duty Tax in the 2024-2025 financial year.
The exemption is part of the amendments in the Stamp Duty (Amendment) Bill, 2024 that was passed during plenary sitting on May 6, 2024.
According to the Bill, to further qualify for the exemption; the companies shall have the capacity to use at least 80 per cent of the locally produced raw materials, subject to availability.
The Chairperson of the Committee on Finance, Planning and Economic Development, Amos Kankunda, added that any car company manufacturing electric vehicles is required to have a minimum investment capital of $10 million in case of a foreigner, or $300,000 in case of a citizen or $150,000 in case of a citizen who invests up the country.
Finance Minister Matia Kasaija of Uganda announced that Uganda has secured orders for electric and low diesel combustion buses from Tanzania, South Africa, Nigeria, and Eswatini, destined for the export market.
