UGANDA, Kampala | Real Muloodi News | The Uganda Revenue Authority (URA) has commenced the new financial year with impressive momentum, marked by sustained growth in rental income tax revenue—a critical component of URA’s domestic tax portfolio.
In the month of July 2024, the URA collected UGX 15.1 billion in rental income tax, an increase of UGX 6.1 billion compared to the same period in 2023.
URA has maintained record-breaking growth in rental tax collections since the introduction of its Rental Tax Compliance System (rTCS) nearly two and a half years ago.
The rTCS is a sophisticated big-data analytics platform designed to ensure that all rental income is identified and accurately declared.
Since the deployment of the intelligence platform in April 2022, the URA’s growth in rental income tax revenue has surpassed all expectations.
In the 2021/22 financial year, rental tax revenue stood at UGX 155.94 billion. Following the introduction of rTCS, revenue jumped to UGX 215.10 billion in the 2022/23 financial year, and further increased to UGX 275.59 billion in 2023/24. This represents an overall growth of nearly 77% in rental income tax revenue over two years, underscoring the system’s effectiveness in enhancing tax compliance.
URA Intensifies Focus on Landlords
Rental income tax has emerged as a key priority for the URA as it seeks to enhance tax compliance and increase revenue.
In line with this focus, the URA appointed Esther Ssemakula Nabatanzi as the new manager of its Rental Unit in July 2024, entrusting her with the task of sustaining the momentum in rental income tax collections.
Ssemakula, who played a pivotal role in the successful implementation of the rTCS, has been a driving force behind the URA’s impressive rental tax results over the last two years.
As the newly appointed manager, Ssemakula has assembled a specialised team of analysts dedicated to leveraging rTCS to thoroughly investigate all landlord cases handled by the Unit. With this strategic approach, Ssemakula is confident in achieving the URA’s ambitious revenue targets within the rental sector.
Landlord Education
Despite the progress made in rental income tax collection, challenges persist, particularly in educating landlords and addressing misinformation about property-related taxes.
The URA continues to confront issues stemming from a lack of understanding about the difference between property rates, imposed by local governments, and rental income tax, levied by the URA, which are two distinct tax categories. This confusion contributes to the under-declaration of rental income in Uganda’s largely informal rental market.
To address these challenges, URA is committed to providing information, services, and technical support to taxpayers, ensuring they understand their obligations and the benefits of compliance.
In its support of landlords, URA has launched a course under its e-tax education program aimed at educating property owners and taxpayers about rental income tax obligations.
The course covers essential topics, including who is obliged to pay rental income tax, how it is computed, and the required documentation for compliance.
This ongoing educational effort is expected to further boost revenue collection in the coming years as more landlords become informed and compliant.
Overall Revenue Collection Performance
In July 2024, the URA exceeded its overall revenue collection target by UGX 93.9 billion, collecting UGX 2.1 trillion against a target of UGX 2.09 trillion. This surplus contributed to a performance rate of 104.48%.
Domestic taxes, including rental income tax, amounted to UGX 1.3 trillion, surpassing the target by UGX 67.3 billion. Customs taxes also performed well, bringing in UGX 853.4 billion with a surplus of UGX 26.6 billion.
URA’s Revenue Strategy and Future Plans
Uganda’s UGX 72.136 trillion budget for the 2024/25 financial year, which commenced on July 1, includes UGX 18.9 trillion in recurrent expenditure and UGX 34.7 trillion in development expenditure.
URA Commissioner General John Musinguzi emphasised the importance of tax compliance in funding Uganda’s social infrastructure, including schools, roads, hospitals, and security.
Musinguzi highlighted the need for all eligible taxpayers to meet their tax obligations to support national development.
The URA’s focus on rental income tax is part of a broader effort to reduce Uganda’s reliance on borrowing and donor funding and achieve financial independence.
As the URA continues to enhance its tax administration capabilities, it aims to increase the number of registered taxpayers and improve compliance across all sectors.
With continued efforts to educate taxpayers and enhance compliance, the URA is well-positioned to meet its ambitious revenue goals and support Uganda’s economic development.
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