Are you planning to buy a used car?

Well, you will have to dig deeper into your pockets with the impending implementation of a new tax policy on used imported vehicles.

Raphael Tugirumuremyi, the commissioner for customs at Rwanda Revenue Authority, said the law seeks to discourage importation of used cars and help cut on carbon emissions.

Tugirumuremyi said the policy targets all categories of used vehicles that are more than one year old, adding that vehicles with high depreciation, will attract high levy.

"The policy does not have a fixed tax rate because the levy is calculated depending on the value of the vehicle and rate of depreciation,” he said.

The policy, which will come into force in April, is jointly implemented with other East African Community member countries.

It was initially scheduled for implementation in September last year, but was postponed to allow for sensitisation of sector stakeholders.

"The East African Community Council of Ministers adopted new car importation and valuation rules, and agreed to enforce the new rules, including standardised depreciation rate, in April last year,” Tugirumuremyi added.

The regional bloc seeks to harmonise the age limit of used cars imported into the region, saying that they are big source of greenhouse gases.

According to the impending policy, cars that are 10 years and above will attract an 80 per cent depreciation rate, while new cars will attract 20 per cent.

"Importers will pay custom duty and other taxes for used cars based on the date of manufacture and the value of the cars,” Tugirumuremyi said.

Mixed reactions

However, the news was received with mixed reactions from used car dealers, saying the new policy could push them out of business.

Lambert Gashagaza, a car dealer, said the new methodology is unfair to some dealers.

"The implementation of the law should be done after adequate sensitisation of stakeholders. Dealers who have already ordered for shipments could suffer losses since they made the orders for vehicles based on the old tax system,” Gashagaza said.

Albert Gasana, another car dealer, told The New Times that increase in taxes on used cars is good for the development of a country as it will cut on carbon emissions, especially now that Rwanda is pushing for green growth.

Jean Luc Mugabo, the commercial director of Rwanda Motors, which deals in brand new cars, said the implementation of new law on old cars is good for the environment, arguing that imported used cars emit harmful gases that destroy the environment.

Rwanda maintains strong policies on environmental pollution and the attention is now turning to vehicle gas emissions.

Used cars have been the preference owing to the low purchasing power for many East Africans.

The dealers of new vehicles may have to come up with flexible payment mechanisms if ordinary Rwandans are to afford new cars.

editorial@newtimes.co.rw