EAC extends 15pc motorcycle tax waiver
Thursday July 02 2015
Motorcycle assemblers have won further extension of a special tax waiver on imported parts, raising hope for growth of the sector.
Harrison Mwakyembe, chairman of the East Africa Community (EAC) Council of Ministers, said the waiver would now be extended to June 2016.
An earlier tax schedule by the council indicated imported motorcycle parts,-commonly known as completely knock down kits (CKD) - would attracted a 15 per cent tax starting July 1, 2014.
The implementation of the tax introduced in 2013 was, however, shelved for a year following intense lobbying by manufacturers of motorcycles.
If implemented, the unpopular tax move would see motorbike manufacturing firms pay the full 25 per cent tax to import spare parts, which is the equivalent of duty paid for finished motorcycles.
Motorcycles are a popular mode of transport in urban areas in the region for their ability to beat lengthy delays caused by incessant traffic jams.
They are also used heavily in rural areas where they offer more flexibility and wider reach as most areas suffer from poor road networks.
The popularity of motorbikes has drawn the interest of investors seeking self-employment, with a large number preferring cheaper Asian models.
Statistics from the Economic Survey 2015 show that 115,451 motorcycles were sold in 2014, falling slightly compared to 125,058 units the previous year. The sale of motorcycles hit a peak of 140,215 units in 2011.
Only manufacturers who sourced motorbike parts from any of the EAC member states were allowed to enjoy the 15 per cent tax waiver.