UGANDA, Kampala | Real Muloodi News | The Uganda Revenue Authority (URA) has issued a directive requiring all commercial building owners in the city to implement E-receipts payment systems for rent collection.
This move aims to address revenue losses caused by tax evasion in the rental income sector, a problem stemming from unclear income reporting practices among landlords.
During a meeting with Kampala’s commercial building owners, URA Commissioner General John Musinguzi Rujoki stressed the importance of enhancing revenue collection and closing existing loopholes.
He highlighted that despite an increase in collections from this sector compared to the previous year thanks to the introduction of the URA’s newest technology advancement, the Rental Tax Compliance System (rTCS), a significant amount of revenue remains uncollected.
He stated, “Though there has been an increase in collections from this sector, which have doubled as per last year’s performance, a lot remains uncollected, and this is what we want to maximise.”
Musinguzi revealed that a substantial sum of USh50 billion had been lost in this sector based on the findings of a recent tax investigation exercise.
This staggering figure was accumulated from auditing just seven buildings. “I have already audited 7 arcades, and the accumulated amount is up to USh50 billion.
Now if I am to audit all the arcades, they might end in closure. So let us do the right thing going forward,” he emphasized.
To rectify this situation, Musinguzi mandated that commercial building landlords implement the practice of issuing e-receipts to ensure the accuracy of income declarations submitted to URA.
The implementation of E-receipts was initially introduced to combat tax leakage, particularly regarding withholding tax. It was first applied to supermarkets and large retail outlets.
The system involves integrating URA’s digital systems with those of the tax agents, who, in the context of rental tax, are the landlords.
Landlords are legally required to receive rental payments through their bank accounts and provide receipts accordingly.
Moses Kalungi, a prominent city landlord present at the meeting, expressed willingness to issue e-receipts but also raised concerns about URA officials’ aggressive tax collection methods.
He suggested a more patient approach, allowing URA to review landlords’ books of account before determining tax obligations.
The meeting also covered topics such as the need for increased awareness campaigns among landlords, efforts to enhance compliance within the sector, and encouraging those with outstanding tax payments to utilise the interest waiver opportunity, which expires on December 31, 2023, under the voluntary disclosure arrangement.
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