KAMPALA — Landlords across the country have an opportunity to make amends with the taxman by making use of the recently passed amendment that waives interest and penalties outstanding as at June 30, 2023.
The amendment allows them to only pay the principle tax.
Although this amendment is open to all taxpayers, it is crucial for landlords because a big number of property owners are not tax compliant. It is an opportunity for them to start on a clean slate without paying penalties.
Speaking at a meeting with landlords on Thursday, John Musinguzi, the Commissioner General of the Uganda Revenue Authority, expounded on this law, saying it is providing relief to taxpayers with big arrears.
“You are able to pay the principal tax, and it is available until December 30, so let’s all take advantage of it,” he said.
Musinguzi noted that despite being one of the least performing tax heads, collections from rental income tax have improved by over 60% in the last three years. Contributions from the tax head totaled to UGX 215 billion in the last financial year, which is 0.8% of the total tax collected. There is potential for the sector to contribute at least 4%.
He encouraged the landlords to embrace voluntary compliance, promising to support them on the journey.
On their part, the property owners voiced concerns on the ledger re-runs that cause errors and ledgers that they say are complicated and hard to understand. Other issues included outdated information on the URA communication channels that does not speak to the current laws and the limited knowledge on the difference between rental tax and property tax. These issues they said, pose a challenge to their understanding of tax.
Musinguzi noted that the authority has stepped up efforts in tax education and elaborated on the ledger challenges.
“We had some challenges with our ledgers due to the migration of one system to another, the application of one of the laws, and the order of recovery of the tax structure of the database, but we have set up a team to deal with ledge reconciliation, and the new e-tax system being worked on will make it appear easy for a common person,” he said.
This engagement comes after an earlier one with business leaders last week to discuss measures to improve rental tax collections.
During that meeting, the leaders promised to furnish URA with information on the actual rent paid by tenants, which they alleged landlords hide in fake receipts