Who is Required to Pay Rental Tax?
Every landlord in Uganda earning rental income has an obligation to pay tax. By paying taxes, you avoid harsh penalties and contribute to national improvement
What am I Required to do?
As a taxpayer, you must:
Complete a return of rental income for a year of income with supporting agreements where available or rental receipts issued to tenants(s) during the year
Declare ALL your sources of rental income in FULL for a given year of income. The year of income is from July to June
Submit (furnish) the Provisional and annual return to Uganda Revenue Authority, through the nearest local
URA Office, within three months for the provisional return i.e. not later than 31st September; and six months for the annual return after the end of the relevant year of income, i.e. not later than 31st December
Where a provisional return has been filed, pay quarterly the rental income tax by the appropriate due date
What Happens if I don't Pay my Taxes?
Non-compliance will be very costly going forward.
Landlords should now pay attention to the arising rental tax issues and explore ways of legitimate planning as a means of mitigating their rental tax bill
Is a Tenancy Agreement Required?
The law statest that landlords and tenants must sign tenancy agreements for rent transactions of over Shillings 500,000 with clear terms and conditions
How can I Disclose Outstanding Tax Obligations?
There is an ongoing voluntary disclosure programme by the URA.
This programme provides an opportunity for taxpayers to voluntarily disclose outstanding tax obligations including payment of the arising principal taxes in exchange for a waiver of interest and penalties accruing thereto.
The URA is compelling taxpayers to revise their prior year tax returns with full details of their rental expenses and landlords so that they can be followed up. For assistance email firstname.lastname@example.org or call the URA toll-free line 08001 17000 or 0417444602 (not toll free).
What is a TIN?
Taxpayer Identification Number in Uganda is a unique identifying number assigned to every taxpayer by Uganda Revenue Authority (URA) for tax administration purposes. Any person who is likely to transact in any tax related business with URA, shall be required to apply for a TIN. The TIN is therefore an administrative requirement and applies to all taxpayers regardless of the tax transaction
Increased tax compliance has far-reaching benefits for Uganda’s real-estate sector:
•Increased compliance creates increased transparency, attracting the right capital for property developers and ultimately, the entire industry.
•The increased revenue generated by equitable taxation leads to improved planning and infrastructure; key factors necessary to drive investment in property development and growth in the sector.
•Tax compliance helps create a level playing field in the real estate market; it creates healthy competition, increasing rental incomes for the sector.
rTCS identifies the right landlords of properties in the Greater Kampala area, and what income is likely to be coming out of such properties. It ensures that all landlords who earn rental income contribute their fair share to Uganda’s revenue and the resulting prosperity.
The most successful landlords and property developers in Uganda understand the benefits of paying rental income tax. Compliance is necessary to attract financing for existing or expansion projects. Loan underwriters will consider the tax perspective of real estate financial models during loan underwriting. Banks and other capital investors will be reluctant to finance investments that don’t declare or under-declare their obligations.
There are no additional fees or levies on the taxpayer to pay for the rTCS system, so it will not increase taxes.
Tax compliance is essential for boosting the real-estate sector, building national prosperity and ensuring tax equitability. Now that rTCS provides URA with a means to enforce compliance, it is crucial to pay your fair share.
Under the Income Tax law, individual landlords earning more than sh2.8m annually, are liable to pay 20% rental income tax, after allowable deductions.
Non-individual landlords pay 30% of the chargeable rental income earned after removing allowable deductions.