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Uganda Raises Import Duty On Electric Vehicles To 25%

UGANDA has raised the import duty on fully electric vehicles, hybrid vehicles, and electric motorcycles from zero to 25 percent in the current financial year. This change has significantly increased the cost of these vehicles. For instance, the price of a Nissan Leaf at Motorcare Uganda has risen by over USh51 million ($13,750), from USh204.3 million ($55,000) to USh255.3 million ($68,750), making it the most affordable model in Kampala.

Uganda Revenue Authority (URA) data revealed that when the import duty was zero-rated, electric car imports surged to 420 units in the 2023-2024 financial year, a sharp increase from just 26 units previously. The data indicated that 403 of these vehicles were hybrids, while 17 were fully electric, highlighting the effectiveness of subsidies in encouraging Ugandans to transition from gasoline-powered cars to hybrids and electric vehicles.

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In contrast, companies that manufacture electric vehicles, electric batteries, or electric vehicle charging equipment, or fabricate the frame and body of an electric vehicle, and employ 80 percent Ugandans, will be exempt from Stamp Duty Tax in the 2024/2025 financial year. This exemption is part of the amendments in the Stamp Duty (Amendment) Bill, 2024, passed during a plenary session on Monday, May 6, 2024, chaired by Speaker Anita Among.

According to the Bill, to qualify for the exemption, companies must use at least 80 percent locally produced raw materials, subject to availability. The Chairperson of the Committee on Finance, Planning and Economic Development, Amos Kankunda, added that companies must have a minimum investment capital of $10 million for foreign investors, $300,000 for citizens, or $150,000 for citizens investing in rural areas.

A report by the International Energy Agency noted that more than half of the world’s electric cars are in China, which was also responsible for 35 percent of global EV exports in 2022.

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