Uganda, Kenya, Tanzania, Rwanda, and Burundi have adopted a three-tiered duty structure for imports from outside the East Africa Customs Union (EACU) under the terms of the Protocol on the Establishment of the EACU, which became fully operational in January 2010. Most finished products are subject to a 25% duty, while intermediate products face a 10% levy. Raw materials (excluding foodstuffs) and capital goods may still enter duty free. Imported goods are charged a value added tax (VAT) of 18% and a 15% withholding tax, which is not reclaimable. Combined, these taxes effectively charge a 33% tax on all foreign goods and services. Imports are also charged a 1.5% infrastructure tax to finance railway infrastructure development. Uganda also recently passed a five percent Digital Services Tax (DST) on non-resident foreign businesses, effective retroactively from July 1, 2023. The five percent tax in on gross revenue and requires foreign companies to file a tax return with the Uganda Revenue Authority on a quarterly basis.
The EAC agreement increased import duties on some products (e.g., chocolate, tomato sauce, mineral water, and processed meat, among others) that Uganda currently imports from the United States.
In November 2009, the heads of state of the EAC member countries signed the Common Market Protocol, agreeing to establish a common market for Kenya, Tanzania, Uganda, Rwanda, Burundi, and South Sudan. The Common Market is being implemented gradually and is supposed to set the stage for implementation of the East African Monetary Union, which is targeted to become fully operational by 2023. In addition to the EAC, Uganda is a member of the Common Market for Eastern and Southern Africa (COMESA), a free trade area comprised of 19 member states aimed at reducing import tariffs among member nations.