Business 13 April 2026 Daily Monitor (Uganda)
Uganda's Proposed 30% Levy on Second-Hand Clothes Sparks Debate Among Importers and Traders
The Ugandan government has proposed a 30 percent environmental levy on imported used clothes to reduce environmental waste and boost local textile production, potentially raising the total tax burden to 93 percent. Critics warn of higher prices for consumers, smuggling risks, and challenges for low-income households reliant on affordable mivumba. Source: https://www.monitor.co.ug/uganda/business/prosper/new-tax-on-used-clothes-hits-importers-5421752
The Finance Ministry recently tabled the Excise Duty (Amendment) Bill for 2026, introducing a 30 percent environmental levy on the CIF value of second-hand clothing imports. State Minister Henry Musasizi stated the measure aims to curb the influx of used apparel, which often becomes waste and burdens waste management systems.
Second-hand clothes, known locally as mivumba, supply nearly 80 percent of Uganda’s clothing needs, with popular markets like Owino thriving on affordable imports. The levy would stack onto existing duties, VAT, and a current 15 percent surcharge, pushing the overall tax rate from 58 percent to 93 percent.
Experts like Juliet Najjinda Mutabaazi from PwC Uganda highlight risks of smuggling and reduced compliance due to shrinking profit margins. The Economic Policy Research Centre (EPRC) notes that local textile manufacturers, though growing to over ten firms, cannot yet match the 80,000 tonnes of annual imports.
Traders via Kampala City Traders Association (KACITA) have appealed for a transition period, citing current contributions of Shs280 billion in 2025 revenue and requesting the surcharge hike from 15 to 30 percent be reconsidered. They face multiple taxes already, including 35 percent import duty and 18 percent VAT, making a container’s surcharge jump from Shs18 million to Shs36 million.
Critics including CSBAG’s Julius Mukunda and FSME’s John Walugembe warn of supply shortages, price hikes, and job losses without bolstering local capacity. While acknowledging environmental goals, they note limited recycling infrastructure undermines the levy’s benefits.
Proponents like SEATINI’s Jane Nalunga support a phased ban to protect the cotton-to-clothing value chain and foster industrialization. Trade Ministry Permanent Secretary Lynette Bagonza confirmed ongoing phasing out with import permit restrictions and plans to integrate dealers into industrial parks.
The proposal awaits parliamentary debate amid concerns over consumer affordability and regional competitiveness.
Source: Daily Monitor (Uganda)