UGANDA, Kampala | Real Muloodi News | From July to December 2024, Uganda Revenue Authority’s (URA) domestic revenue collections reached UGX 15.2 trillion —surpassing the target of UGX 14.9 trillion by UGX 257.06 billion, achieving a performance rate of 102.60%.
Rental income tax was a big contributor to this impressive result, reaching UGX 162.93 billion, about 63.4% of the UGX 257.06 billion surplus, up from UGX 135.53 billion during the same period in 2023, demonstrating a significant boost in compliance and revenue.
Achieving these remarkable results has occurred against a backdrop of privacy debates over inter-agency data sharing used to monitor landlords and ensure compliance. URA faced renewed scrutiny after a leaked letter revealed that URA had formally requested detailed customer data from the National Water and Sewerage Corporation (NWSC). Dated November 5, 2024, and addressed to NWSC Managing Director, Eng. Silver Mugisha, the letter highlights URA’s intent to register all persons liable to pay taxes under Section 3(1) of the Tax Procedures Code Act Cap 343.
“The purpose of this letter is to request for a data set from July 2021 to date to aid in the identification and registration of persons who have not complied with Section 3(1) of the Tax Procedure Code Act Cap 343, which requires all persons liable to pay tax to apply for registration with URA,” the letter stated.
While some members of the public decry potential privacy infringements, legal experts point out that NWSC is legally permitted to share data with URA under existing statutes and inter-agency agreements. According to them, the tax authority’s mandate to collect revenue in support of Uganda’s UGX 72.1 trillion national budget justifies the request, as long as it aligns with established data-protection guidelines.
Nothing New Under the rTCS Project
Despite the public outcry, data-sharing between URA and other government agencies is not new. The Rental Tax Compliance System (rTCS), which has been operational since April of 2022, relies heavily on inter-agency cooperation to identify landlords who under-declare or fail to declare rental income. rTCS integrates datasets from eight Ministries, Departments, and Agencies (MDAs), including:
- Ministry of Lands, Housing and Urban Development
- Kampala Capital City Authority (KCCA)
- National Identification and Registration Authority (NIRA)
- UMEME Limited
- National Water and Sewerage Corporation (NWSC)
- Uganda Communications Commission (UCC)
- Ministry of Local Government and Local Councils
Protecting Privacy: Ensuring Data Security and Compliance
URA emphasizes that rTCS incorporates robust measures to protect individual and corporate data. All data collected through rTCS is housed and processed within Uganda, ensuring compliance with national data protection laws.
The system employs role-based access control (RBAC), which restricts data access to authorized personnel based on their specific roles and responsibilities. This ensures that sensitive information is only accessible to those who need it for legitimate purposes, thereby minimizing the risk of data breaches and unauthorized access.
Furthermore, rTCS adheres to stringent protection protocols, including data encryption, regular security audits, and compliance with Uganda’s Data Protection and Privacy Act. These measures collectively safeguard the privacy of individuals and entities, reinforcing URA’s commitment to maintaining public trust while enhancing tax compliance.
Data Science & Geo-Location: Tracking Occupied Properties
Initially rolled out in April 2022, the rTCS uses satellite imagery and data science to map out properties and match them to their respective owners. By cross-referencing multiple sources, URA can detect signs of occupancy. Integration with UMEME and NWSC data provides vital clues about when buildings are in use, enabling URA to check utility consumption against landlords’ rental income declarations.
“Unfortunately for property owners, hiding is going to be very difficult now that we can geo-locate where you are with the rTCS tool. It’s only a matter of time before we eventually land on your property,” said URA Commissioner General John Rujoki Musinguzi.
“rTCS not only tells us the location but also the occupancy of a property, and so we will be able to know which month the property was in occupancy or when it wasn’t in occupancy using utilities data.”
Spotting Discrepancies and Boosting Compliance
A key component of the rTCS is its risk-profiling engine. It compares information from landlords, tenants, and other third-party sources, flagging discrepancies such as a tenant’s reported rent that outstrips the landlord’s declared amount. The system then consolidates this intelligence for targeted investigative follow-up, ensuring resources are deployed efficiently toward high-risk cases.
Why Rental Tax Matters: The UGX 72.1 Trillion Budget
In an economy where Pay-As-You-Earn (PAYE) contributes an estimated 18% of URA’s annual earnings—making it one of the largest sources of domestic revenue alongside VAT and corporate income tax—the push to boost rental income tax revenues has taken on greater urgency. Uganda’s UGX 72.1 trillion national budget requires robust and diversified streams of tax revenue, and URA sees landlords who collect considerable rental income as an area ripe for enforcement.
“It’s only fair,” says one analyst, “that landlords, who are wealthy enough to earn lucrative income from real estate, pay their due share of taxes—especially when the majority of formally employed Ugandans are already taxed at source through PAYE.”
Record-Breaking Rental Income Tax Collections
Speaking at a press briefing in Kampala, the URA Commissioner General John R. Musinguzi attributed the increase in tax collections to improved compliance processes, such as prefilled tax returns for rental tax and local excise duty, which have reduced turnaround times and lowered compliance costs for taxpayers.
The rTCS’s impact is evident in URA’s recent rental income tax figures:
- Fiscal Year 2023/24 (July 2023 – June 2024) closed with an impressive UGX 275.59 billion in rental income tax; the highest ever annual earnings from rental tax in URA’s history.
- Fiscal Year 2024/25 is on a track to surpass these numbers. From July to December 2024, URA recorded UGX 162.93 billion—a substantial jump compared to UGX 135.53 billion in the same period a year prior. December 2024 alone brought in UGX 82.50 billion, topping the previous December’s figure by roughly 8%.
If current trends persist, FY 2024/25 may see record-setting collections, providing essential support to the country’s UGX 72.1 trillion budget.
Balancing Privacy and National Interests
The leaked NWSC data request ignited an age-old debate over the right to privacy and the government’s obligation to collect taxes. Yet, URA is the legal authority under the Tax Procedures Code Act, and specific inter-agency protocols allows it to harness utilities data for the greater goal of curbing tax evasion and contributing to Uganda’s fast-growing development.
Tax experts assert that these approaches are consistent with global best practices in revenue administration—using data analytics to close compliance gaps. URA’s stance is that collecting data from multiple sources ensures a fair and transparent tax regime, especially important given the scale of Uganda’s fiscal needs.
“And it is because of your contribution that the government has been able to provide the much needed social services,” said Musinguzi as he praised compliant taxpayers.
Judging by the record-breaking rental income tax collections achieved so far, many analysts believe that, if properly managed, the rTCS could emerge as one of the most impactful measures to date in strengthening Uganda’s domestic revenue base.
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