KAMPALA, Uganda — The Uganda Revenue Authority (URA) has increased the Cost, Insurance and Freight (CIF) exchange rate used to calculate import taxes from Sh3,881 to Sh4,147.66 per US dollar. The adjustment will raise the shilling value of imported goods for tax assessment purposes, prompting concerns among traders over higher business costs.
The new rate represents an increase of approximately 6.9 percent. Under Uganda’s customs regime, the CIF value, which covers the cost of goods, insurance and freight to the point of entry into the East African Community, typically through Mombasa or Dar es Salaam, forms the primary basis for calculating most import related taxes and levies.
These include customs duty, charged under the EAC Common External Tariff at rates of 0, 10, 25 or 35 percent depending on the product classification, 18 percent Value Added Tax (VAT), 6 percent withholding tax, a 1.5 percent infrastructure levy and, in many cases, a 2 percent import declaration fee.
An increase in the exchange rate raises the taxable value of imported goods in Uganda shillings, consequently increasing the total taxes payable, even when the original invoice value in US dollars remains unchanged.
URA publishes monthly exchange rates for import and export transactions, converting foreign currency invoices into Uganda shillings using rates derived from Bank of Uganda data. The authority’s official guidance states that where commercial invoices are denominated in foreign currencies, the customs value is converted using the exchange rate published monthly by URA.
The adjustment comes amid growing pressure on the Ugandan shilling. Market rates in early November 2026 hovered around Sh4,270 to Sh4,280 per US dollar, following a sharp depreciation in recent months. The currency reached levels close to or above Sh4,400 in late October, marking one of its weakest periods in decades.
The depreciation has been driven by strong demand for dollars from importers, elevated energy costs, reduced portfolio inflows and other external factors. In response, the Bank of Uganda raised its policy rate to 12 percent in an emergency move earlier in October and intervened in the foreign exchange market.
Inflation also rose to 5.8 percent in October, its highest level in three years, partly reflecting increased food and fuel prices associated with the weaker currency.
Traders have expressed concern over the adjustment. Reports circulating through official channels, including a media review shared by the Government Citizen Interaction Centre, indicate that the higher CIF rate is expected to increase the shilling value of imported goods and raise the tax burden on importers.
Broader complaints from Kampala traders, particularly those dealing in garments, hardware, ICT equipment and other imported merchandise, have highlighted exchange rate volatility as a major business challenge.
Hardware dealers and other traders have reported difficulties setting prices, recovering costs and maintaining profit margins amid currency fluctuations. Some have also pointed to the additional pressure of paying rent in US dollars while conducting much of their business in Uganda shillings.
Traders have warned that rising operating costs, combined with clearance delays and regulatory challenges, could undermine Kampala’s competitiveness as a regional trading hub.
The Kampala City Traders Association (KACITA) and individual importers have previously linked high business costs, tax burdens and weak export earnings to pressure on the shilling. They argue that Uganda’s import dependent economy remains particularly vulnerable when foreign currency inflows are insufficient to meet demand.
Although the monthly CIF exchange rate adjustment is a standard administrative procedure rather than a discretionary increase in tax rates, its size under the current economic conditions is likely to amplify the cost of importing goods.
The actual impact on individual importers will depend on the types of goods they bring into the country and the applicable duty rates. Products subject to higher tariffs or additional levies, including environmental charges on used clothing and older vehicles, are likely to attract larger increases in absolute tax amounts.
The additional costs may eventually be absorbed by traders, passed on to consumers through higher retail prices or partly offset through reduced profit margins. These outcomes could place further pressure on businesses already dealing with reports of weakening consumer purchasing power.
It is an established practice of publishing monthly exchange rates which is consistent with the East African Community’s customs valuation framework.
Under this framework, the primary method of customs valuation remains the transaction value, representing the actual price paid or payable for the goods, with the applicable foreign currency converted into Uganda shillings for tax assessment.
As the shilling remains under pressure and monetary authorities pursue measures to stabilise the currency, the higher CIF exchange rate highlights how foreign exchange movements feed into the wider economy through the import sector.
Traders continue to call for more predictable tax administration, faster customs clearance and broader measures to support foreign exchange inflows. Authorities, meanwhile, maintain established valuation and currency conversion procedures for assessing imports.
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