UGANDA, Kampala | Real Muloodi News | There are several draft Amendment Bills currently before Parliament for debate which propose changes to Ugandan tax laws that impact property owners and developers. These include the Income Tax Act and the Tax Procedure Code Act, among other tax bills.
Parliament has therefore invited the general public to submit their views on the tax bills online, by Wednesday 4th May 2022.
Key Proposed Changes to the Tax Laws that Impact Property Owners & Developers
Income Tax Act
Rental Income
- Reduction in computation of rental tax for individuals from 30% on chargeable income to 12% on gross rental income.
- Deductible expenses and losses allowable to taxpayers earning rental income shall be capped to 50% of their rental income in that year of income. Currently they stand at 75%. Any excess shall be carried forward to the subsequent year;
- Repeal of the deduction of interest expense incurred on a mortgage from financial institutions and applied towards the acquisition or construction of premises from which rental income was generated. This is currently an allowable deduction for individuals.
Interpretation
- Redefinition of “beneficial owner” to mean a natural person who ultimately owns or controls a customer or the natural person on whose behalf a transaction is conducted, including a person who exercises ultimate control over a legal person or arrangement;
- Introduction of the definition of “legal person” to include a natural person who either directly or indirectly has at least 10% shareholding or voting rights, a natural person exercising control of the legal person through other means including personal or financial superiority; or a natural person who has power to make or influence a decision of the legal person.
Definition of the “business asset” for purposes of WHT
- A business asset is defined to mean land, the whole or any part of it which is held for use in any business except land held as a trading stock.
- Exemption from 6% WHT on sale of business asset for compliant taxpayers.
Tax Procedures Code
- Temporary closure of businesses that do not comply with the requirements of electronic receipting and invoicing – landlords and property managers who earn more than USh 150 million must implement the electronic invoicing system EFRIS.
- Introduction of penalties for offences relating to misuse of the electronic receipting and invoicing system;
- Requirement for disclosure of information by persons engaged in the construction or extractive industry and introduction of a penalty of USh 20 million for failure to comply;
- Introduction of rewards to informers whose information leads to the collection or recovery of tax.
Stamp Duty
- Removal of stamp duty on the execution of agreements relating to deposits of title-deeds and pawn pledges;
- Removal of stamp duty on the execution of instruments relating to security bonds or mortgage deeds;
- Imposition of stamp duty on instruments executed in relation to Trusts concerning any property made by any writing including a transfer from a holder of letters of administration or Probate orders to a beneficiary
To voice your say on these changes, email clerk@parliament.go.ug / mmuhumuza@parliament.go.ug by Wednesday 4th May 2022.
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