By Moses Mulondo
Uganda Revenue Authority has revealed that it will soon begin collecting tax on all rental houses and properties within urban areas as part of its new initiatives to generate more tax revenue to implement government programmes.
The revelation came in Parliament while the URA commissioners were appearing before the finance committee to explain their plans for the new financial year.
The committee chairman, Robert Kasule, who is also the Kyadondo North MP, asked the commissioners to assure the nation whether URA would be able to fill the gap created by the withdrawal of donor funds.
Responding to Kasule and Kioga MP Anthony Okello on the new initiatives that will generate more revenue, URA’s commissioner for domestic revenue, Henry Saka, said they would enforce and widen the scope of rental taxation to include all urban centres in the country.
On the percentage of rent which URA will take, Saka said: “We shall tax every property or house which is rented. If it is owned by an individual it will be taxed 20% and if it is a company, it will be 30%.”
But some MPs protested the rental tax, arguing that 20% and 30% is high and property owners will resist.
“Taking 20% of someone’s revenue is too much. At least if they can reduce it to 10%, it will be easy for the owners of the houses to comply,” said the Bushenyi Municipality MP, Odo Tayebwa.
Kasule said: “It is good for URA to get more other areas to tax so that money for rendering government services can be generated. If the tax is so high, people can appeal so that it is reduced.”
This tax is likely to be protested by traders and residents of urban centres since these taxes will be passed over to them by their landlords in form of increased rent charges.
URA boss Allen Kagina reported that Uganda’s tax revenue collection has increased by 12% and this is the reason why Uganda is now able to fund 82% of its budget.
Kagina revealed that in the financial year which has just ended (2013/2014), URA collected a total of sh8,031b.
In the 2012/2013 financial year, URA collected sh7.1trillion out of a target of sh7.28 trillion. She said in the 2014/2015 financial year, the tax body intends to collect sh9.5 trillion, which is sh1.5 trillion more than what has been collected in the previous year.
Kagina said although revenue collection in 2013/2014 grew by 12.33% compared to what was collected in the previous year, they registered a shortfall of sh504b in the 2013/2014 financial year.
URA to collect tax on rented houses, properties