Thabo Nkosi 
Uganda has introduced new electric vehicle (EV) import rules in 2025 to promote local manufacturing, reduce reliance on imports, and make EVs more accessible. These changes include higher import duties on fully built EVs, tax exemptions for local manufacturers, and incentives for assembling electric motorcycles. Here’s a quick breakdown:
- 25% Import Duty on Fully Built EVs: Reinstated to encourage local assembly, raising prices for imported EVs.
- Duty and VAT Exemptions for Local Manufacturers: Parts and components for assembling EVs locally are tax-free.
- 5-Year Income Tax Exemption: For local electric motorcycle manufacturers.
- Excise and Stamp Duty Exemptions: For manufacturers meeting investment thresholds.
- Higher Import Duties on Gas and Diesel Vehicles: To push consumers toward EVs.
These policies aim to support local production, lower costs for domestic manufacturers, and create jobs, while making imported EVs more expensive.
EV adoption stalls as import taxes return
1. 25% Import Duty on Fully Electric Vehicles
In May 2024, Uganda reinstated a 25% import duty on fully electric vehicles (EVs) as part of the East African Community (EAC) tariff review. The move, intended to encourage local vehicle assembly, has sparked reactions across the industry.
Moses Kaggwa, a Director at the Uganda Revenue Authority, clarified the decision:
"We were allowed to reinstate the import duty on fully built electric bikes, hybrid vehicles, and electric vehicles during the review of the East African Community (EAC) Common External Tariff in May 2024."
This policy change has had a noticeable impact on EV prices. For example, Motorcare Uganda saw the cost of the Nissan Leaf rise by over UGX 51 million (around $13,750). The price jumped from UGX 204.3 million (approximately $55,000) to UGX 255.3 million (about $68,750), making EVs significantly less accessible for individual buyers. Before the duty was reinstated, EV imports had surged, growing from just 26 units to 420 units in the 2023–2024 fiscal year. The sudden policy shift has now introduced uncertainty into the market.
Benon Mascot, Deputy General Manager of Sales and Marketing at Motorcare Uganda Nissan, highlighted the challenge:
"Electric cars are already expensive."
The government’s goal is to transition from importing fully built vehicles to promoting local assembly. This aligns with Uganda’s National E-Mobility Strategy, which seeks to reduce the country’s reliance on imports while developing domestic expertise in clean transportation technologies. However, the increased import costs and the unpredictability of such policies are hurdles for both dealers and early-stage investors in the sector.
2. Import Duty Exemptions for Local Manufacturers
Uganda is stepping up efforts to support the domestic assembly of electric two-wheelers by introducing new import duty exemptions. These incentives are designed to make it easier and more cost-effective for local manufacturers to operate.
Under the National E-Mobility Strategy, companies assembling electric two-wheelers in Uganda are exempt from both import duties and VAT on essential components. Highlighting the rationale behind these measures, State Minister for Investment Evelyn Anite stated:
"The incentives are designed to encourage investment and local manufacturing while curbing the importation of fully built fuel-powered motorcycles."
One company set to benefit from these exemptions is Spiro, an electric mobility firm that operates a battery-swapping system for electric motorcycles. By July 2025, Spiro plans to expand its local assembly operations, significantly increasing its production capacity. This demonstrates how these policies are directly benefiting domestic manufacturers and encouraging growth in the sector.
With these initiatives, Uganda is positioning itself as a rising player in electric motorcycle production within East Africa. The country could also tap into opportunities offered by the African Continental Free Trade Area (AfCFTA), potentially exporting to neighboring markets and beyond.
3. 5-Year Income Tax Exemption for EV Manufacturers
In a move to further support the electric vehicle (EV) industry, the Ugandan government has introduced a five-year income tax exemption for local electric motorcycle assemblers. This policy eliminates a significant financial burden, allowing manufacturers to save on recurring tax expenses. These savings can be channeled into areas like expanding production capacity, advancing technology, or even making EVs more affordable for consumers.
The exemption aligns with Uganda’s broader goal of promoting clean transportation and fostering local manufacturing. It complements other measures, such as duty exemptions and incentives for local assembly, creating a more appealing environment for both domestic and international investors to participate in the country’s growing EV market.
For companies like Spiro, which plans to ramp up its local assembly operations by July 2025, this tax break is a game-changer. It helps offset the high initial costs of setting up operations, providing a competitive edge. The funds saved can be reinvested in critical areas, such as hiring and training local talent or upgrading assembly equipment. By doing so, manufacturers not only strengthen their own operations but also contribute to the long-term growth of Uganda’s clean transportation sector.
4. VAT Exemption on Locally Made EVs and Charging Services
Uganda is stepping up its support for local electric vehicle (EV) production by introducing a VAT exemption on parts and components used for assembling electric two-wheelers locally. This move is designed to cut production costs for manufacturers, making it more appealing to assemble EVs domestically rather than relying on imports of fully built units. The focus here is on electric motorcycle assembly, aligning with the country’s push to reduce reliance on fuel-powered motorcycles.
One company set to benefit significantly from this tax break is Spiro, a key player in Uganda’s electric mobility sector. Spiro operates a battery-swapping system for its electric motorcycles, and the VAT exemption will help lower its production costs, making its operations more competitive. This initiative is part of Uganda’s broader plan to strengthen its local EV manufacturing ecosystem.
5. Zero Import Duties on EV Parts and Manufacturing Materials
Uganda has removed import duties on parts and components essential for assembling electric vehicles locally, giving manufacturers a significant cost edge. Businesses producing electric two-wheelers within the country now enjoy exemptions from both import duties and VAT. This reduces expenses significantly compared to importing fully assembled vehicles, which are subject to a 25% duty. These steps highlight Uganda’s efforts to build a competitive and locally driven EV industry.
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6. Tax Breaks for Electric Motorcycle Assembly Operations
Uganda has introduced additional incentives to boost local electric motorcycle assembly operations. Companies assembling electric motorcycles domestically are now eligible for a five-year income tax holiday, along with exemptions from duty and VAT on essential assembly parts. These measures aim to reduce financial hurdles, encouraging growth in the early stages of local production.
One notable example is Spiro, an electric mobility company that operates a battery-swapping system for electric motorcycles. Spiro has announced plans to expand its local assembly capabilities by July 2025. By combining tax holidays with duty-free imports, Uganda is helping firms like Spiro establish profitable operations while ensuring that motorcycle prices remain affordable for riders.
These tax incentives are specifically reserved for businesses involved in local assembly, reflecting Uganda’s commitment to building a self-sufficient and competitive EV manufacturing industry.
7. Excise and Stamp Duty Exemptions for Qualifying Manufacturers
In addition to tax breaks and VAT exemptions, the government has introduced targeted excise and stamp duty exemptions to further lighten the financial load for manufacturers.
As part of Uganda’s 2025 EV import regulations, these exemptions are available to manufacturers who meet specific investment thresholds. The excise exemption applies to manufacturers involved in producing electric vehicles, batteries, charging equipment, or vehicle frames and bodies. To qualify, foreign manufacturers must invest at least $35 million, while citizen manufacturers can qualify with a minimum investment of $5 million.
The stamp duty exemption comes with lower thresholds. Foreign manufacturers need to invest at least $10 million, while citizen manufacturers qualify with a minimum of $300,000. For citizen manufacturers operating outside major urban centers, the threshold drops further to $150,000.
These tiered requirements provide clear pathways for both foreign and local manufacturers, encouraging investment across different scales and regions.
8. Higher Import Duties on Gas and Diesel Vehicles
Starting in 2025, new regulations will bring increased import duties on gasoline and diesel vehicles. The goal? To nudge consumers toward cleaner, greener transportation options. By raising these duties, the upfront cost of traditional vehicles will climb – impacting both individual buyers and commercial importers.
This move is designed to make conventional vehicles less appealing when compared to electric vehicles (EVs), which benefit from a range of incentives. These higher taxes are part of Uganda’s broader push to encourage the growth of its EV market and promote cleaner energy solutions.
What These Changes Mean for Businesses and Consumers
Uganda’s new policies clearly favor local electric vehicle (EV) production over imports, creating a landscape where businesses and consumers alike will feel the impact. For companies looking to enter Uganda’s EV market, the incentives strongly tip the scales toward local production rather than importing fully assembled vehicles.
Here’s how the changes play out: importers face higher costs, thanks to a 25% import duty on fully built EVs. This added expense raises the price tag for consumers, potentially slowing the spread of imported EVs compared to the earlier period when such duties were waived. Simply put, buying an imported EV just got pricier.
On the other hand, local manufacturers stand to benefit significantly. Tax breaks and exemptions make it cheaper to produce EVs domestically. A five-year income tax holiday slashes costs for local producers, while exemptions on import duties for EV parts and raw materials, along with VAT exemptions on locally made EVs and charging services, create an environment where assembling vehicles locally is far more cost-effective.
Beyond pricing, the government’s 80% local content requirement has broader implications. This policy encourages the growth of a domestic supply chain, opening doors for businesses involved in producing EV components, such as batteries, charging equipment, and vehicle frames. Companies providing locally sourced materials or services to EV manufacturers will find themselves in a growing market, with demand for their products and expertise on the rise.
For consumers, these policies could lead to more affordable locally produced EVs. As manufacturers take advantage of tax incentives, the cost of locally made vehicles should become more competitive. VAT exemptions on these vehicles and charging services will further reduce prices at the point of sale, making EV ownership more accessible.
The focus on local production also brings employment opportunities. With an 80% local employment requirement, jobs will open up across various skill levels, from assembly line workers to engineers and technicians. This not only supports economic growth but also helps build a skilled workforce in the EV sector.
Investors and entrepreneurs looking into charging infrastructure will find fertile ground as well. With more locally produced EVs hitting the roads, the demand for charging stations and related services is bound to increase. Government policies aimed at expanding EV infrastructure further enhance these opportunities.
For businesses, timing is everything. Early entrants in local EV manufacturing can secure a strong foothold in the market by leveraging these tax incentives and favorable policies. Those who delay may find themselves playing catch-up in a market already dominated by established players.
Conclusion
Uganda is setting its sights on becoming a key player in the electric vehicle (EV) industry by focusing on local production rather than relying on imported finished products. With a 25% import duty making foreign EVs pricier, the government has introduced a series of incentives to encourage local manufacturing. These efforts aim to create a supportive environment for both industry players and consumers.
To make production more affordable, the government has implemented excise and stamp duty exemptions, which help cut costs throughout the manufacturing process. At the same time, higher import duties on gas and diesel vehicles are pushing the market toward electric alternatives.
This shift represents Uganda’s ambition to transform from a passive importer into a regional EV manufacturing hub. By prioritizing investment in local production and supply chains, the government is laying the groundwork for a thriving EV industry. While it remains to be seen if these efforts will lead to widespread EV adoption and a sustainable domestic market, the foundation for change is clearly in place.
FAQs
What impact will the reinstated 25% import duty on fully built electric vehicles have on Uganda’s EV market?
The reintroduction of a 25% import duty on fully assembled electric vehicles (EVs) in Uganda is likely to push up their initial purchase price. This could put EVs out of reach for many individuals and businesses, potentially slowing the pace of adoption across the country.
On the flip side, this policy shift might incentivize local assembly and manufacturing of EVs, as imported components typically face lower taxes. While the higher upfront costs may discourage some buyers in the short term, the broader effect could stimulate investment in Uganda’s EV sector and related infrastructure over time.
What advantages do Uganda’s updated 2025 EV import rules offer to local manufacturers?
Uganda is rolling out updated rules for EV imports starting in 2025, and they could bring some real advantages for local manufacturers. One big change? Lower import tariffs on certain EV components. This tweak could make it cheaper for manufacturers to bring in parts for local assembly. On top of that, there’s talk of tax incentives for companies that meet specific compliance standards, which could further encourage investment in local production.
The goal behind these updates is clear: to strengthen Uganda’s EV industry, create more jobs, and push forward the shift to greener transportation. By cutting costs and offering attractive incentives, the government is aiming to give local manufacturing a competitive edge and draw in more investors.
How are changes to import duties on gas and diesel vehicles encouraging the shift to electric vehicles in Uganda?
The Ugandan government has recently revised import duties on gas and diesel vehicles, aiming to make electric vehicles (EVs) a more appealing choice for buyers. By raising taxes on traditional fuel-powered cars, they’re reducing their affordability while encouraging EV adoption through lower tariffs and tax perks.
This move ties into Uganda’s broader efforts to embrace cleaner energy and cut down on carbon emissions. For individuals and businesses, this could translate into not only environmental advantages but also potential long-term savings.
