URA has warned landlords against non-compliance. PHOTO BY ERONIE KAMUKAMA
Kampala. Government expects to
raise Shs117b from rental tax before the end of the 2017/18 financial
year, which has about two months to end, according to Uganda Revenue
Authority.
In an interview yesterday, Mr Ian Rumanyika, the URA corporate and communication affairs manager, said rental tax is one of the avenues that will help to widen the tax base as government seeks to raise enough to finance the budget.
In an interview yesterday, Mr Ian Rumanyika, the URA corporate and communication affairs manager, said rental tax is one of the avenues that will help to widen the tax base as government seeks to raise enough to finance the budget.
However, he said, the tax has been in existence and URA was only reminding landlords to comply or face the law.
In a noticed published early this week, URA notified landlords that it had started a door-to-door registration exercise for rental tax in Wakiso, Kampala, and parts of Mukono.
The exercise, the notice said would extend to other areas, warning landlords who had not registered to comply or face penalties.
“URA therefore advises you to voluntarily comply with your rental tax obligation to avoid penalties,” the notice reads in part.
Experts, who spoke to Daily Monitor yesterday welcomed the move, saying all Ugandans who have a credible source of income must pay taxes.
Mr Gideon Badagawa, the Private Sector Foundation Uganda executive director, said the tax was fair because it is instituted on income and was directly in line with the principle of progressive tax.
“You cannot be taxed if you are not earning rental income. It is a tax on landlords owning properties. I have no problem with that,” he said.
A 20 per cent tax rate will be applicable on rental units that raise above Shs2.82 million monthly.
In a noticed published early this week, URA notified landlords that it had started a door-to-door registration exercise for rental tax in Wakiso, Kampala, and parts of Mukono.
The exercise, the notice said would extend to other areas, warning landlords who had not registered to comply or face penalties.
“URA therefore advises you to voluntarily comply with your rental tax obligation to avoid penalties,” the notice reads in part.
Experts, who spoke to Daily Monitor yesterday welcomed the move, saying all Ugandans who have a credible source of income must pay taxes.
Mr Gideon Badagawa, the Private Sector Foundation Uganda executive director, said the tax was fair because it is instituted on income and was directly in line with the principle of progressive tax.
“You cannot be taxed if you are not earning rental income. It is a tax on landlords owning properties. I have no problem with that,” he said.
A 20 per cent tax rate will be applicable on rental units that raise above Shs2.82 million monthly.
Dr Fred Muhumuza, a Makerere University lecturer, said rental tax was a big source of revenue and was a welcome move.
“It is a big source of earning. Landlords are rich people. At least they are not poor. So they should be taxed,” he said.
However, Mr Nathan Were, who owns 23 rental units in Kasangati, Wakiso District, said this was another burden and the cost will be passed to tenants.
“I have no choice. I will just pass the tax to tenants,” he said, adding: “URA needs to sensitise us before they come down on us.”
“It is a big source of earning. Landlords are rich people. At least they are not poor. So they should be taxed,” he said.
However, Mr Nathan Were, who owns 23 rental units in Kasangati, Wakiso District, said this was another burden and the cost will be passed to tenants.
“I have no choice. I will just pass the tax to tenants,” he said, adding: “URA needs to sensitise us before they come down on us.”
Charges:
According to URA, landlords, who for instance, own four flats and
collecting Shs500,000 per month from each will have an annual income of
Shs24m. The landlord is allowed to deduct a chargeable of 20 per cent
which goes to expenses such as repairs and maintenance. The balance,
which is about Shs16.3m is subjected to a 20 per cent tax that
translates to about Shs3.2m per annum.
dnakaweesi@ug.nationmedia.com
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