What are Examples of Non-Compliance by a Landlord?
non-payment of the rental tax
failure to have tenancy agreements
failure to issue receipts or issue of falsified receipts
landlords claiming utilities expenses, when the expense was incurred by the tenants
Why is Rental Tax Compliance important to me, a Tenant?
Non-compliance by landlords has serious repercussions for tenants. A tenant, who fails to present a genuine tax invoice to URA, is likely to lose money as they may fail to claim VAT input tax credit or income tax deductions
How will Improved Tax Compliance Impact me?
Improved compliance and fair taxation will strengthen national development and independence
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
Why are Accurate Rental Receipts Important?
Your landlord 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
Can my landlord Increase my Rent to Cover the Cost of the Taxes?
By law, your landlord cannot increase rent at a rate of more than 10 per cent annually and requires a 90 days’ notice to be issued to the tenant in respect of any increments
All landlords who earn rental income are obliged to contribute their fair share of rental income tax. Tax compliance is important for building national prosperity and ensuring tax equitability. The rTCS system provides the Uganda Revenue Authority (URA) with a means of enforcing compliance.
Some landlords have been under-declaring rental earnings, at the expense of their tenants. In some instances, the tenant has been paying the full rent to the landlord, yet they have not been issued with legitimate receipts that would enable them to claim tax credits for their respective tax returns. rTCS will address this issue, and tenants will be able to take the full advantage of declaring the accurate rental expenses incurred and claim their tax credits.
Per the Landlord and Tenant Bill that was passed in 2018, taxes are to be paid by the Landlord, not the tenant. There are no additional fees or levies on the landlord to pay for rTCS, so it will not increase taxes. Therefore, a landlord should not use rTCS as an excuse to increase your rent.
If a landlord does attempt to increase your rent, you have certain rights under the Landlord and Tenant Act:
•Under fixed-term tenancies, rent stays the same until the term is finished unless there’s a contrary agreement.
•Landlords are prohibited from increasing rent at a rate of more than 10% annually.
•Landlords are required to give notice of 90 days in case of a rent increment.
Other Highlights from the Act
•A landlord will be required to immediately issue the tenant with a payment receipt where the tenant makes the rental payment in person, or within five working days where the rental payment is not made in person. The receipt should reflect the accurate amount of rent paid, and also display the landlords Tax Identification Number (TIN).
•Landlords and tenants must sign tenancy agreements for rental transactions of over Shillings 500,000 with clear terms and conditions. A tenancy agreement can be oral where the amount is less than USh500,000 (however It is advised that terms of a tenancy relationship is reduced into writing to avoid undesired consequences in the event of termination).
•Rent denominations should be in Uganda shillings unless there is a contrary agreement. This maintains the value of the Ugandan currency.
•The Act restricts payment of more than three (3) months in rent in advance for one month unless the tenant opts to do so in writing.
•The Landlord is permitted to charge a security deposit that doesn’t exceed one month’s rent.
•There’s a restriction to the right of entry of premises which requires the Landlord to give 20 hours notice before visiting the premises.
Increased revenue generated by equitable taxation leads to improved planning and infrastructure that directly benefits you, the tenant. If your landlord is not in compliance with their obligations, you should report non-compliance to the URA. You can do so HERE