UGANDA, Kampala | Real Muloodi News | The Uganda Revenue Authority (URA) has announced it is specifically targeting landlords with it’s sophisticated intelligence tool, the Rental Tax Compliance System (rTCS).
However, in an act of benevolence, URA is also offering support to landlords with an amnesty that waives interest and penalties if they pay off their outstanding principal tax by 31st December 2023.
During an NBS News Live media conference on December 14, 2023, Sarah Chelangat Muzungyo, the Commissioner of Domestic Taxes, emphasised the impact of technology on tax administration.
“We now have a lot of automation that is supporting us in this field. We have the RippleNami tool called the Rental Tax Compliance System, which uses satellite technology to geo-map, locate, and identify properties,” she said.
“We specifically want to request our rental taxpayers to take advantage of the tax waiver to pay tax, because otherwise we will assuredly come to you and there will be a lot of interest and penalty payments, so let’s work together,” she added.
rTCS is an advanced intelligence tool that utilises satellite technology and data science to identify property owners who are non-compliant with their rental tax obligations. The system, which first went live in April last year, harnesses sophisticated technology to analyse data from eight Ministries, Departments, and Agencies (MDAs), with the most recent data sharing entity to come on board being UMEME Limited, Uganda’s main electricity distribution company.
John Rujoki Musinguzi, the URA Commissioner General, underscored the capabilities of the rTCS and emphasised that property owners can no longer conceal their assets due to the comprehensive data provided by the system.
“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,” he said.
Musinguzi also explained how rTCS uses UMEME and National Water data, saying, “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.”
rTCS identifies specific risk factors associated with tax evasions, such as discrepancies between landlord and tenant reported rent, and the number of properties identified by the system compared to the number of properties that landlords declare. The tool then consolidates and prioritises essential information for investigations. This targeted scrutiny allows for a more efficient allocation of resources to prioritise high-risk cases.
Musinguzi stressed the impending need for non-compliant landlords to rectify their status, and to take advantage of the Voluntary Disclosure Program, which concludes on December 30, 2023, to pay taxes now and mitigate future complications.
The Commissioner General explained the consequences of tax evasion, noting, “when we are auditing tax evasion, we can audit up to ten years where there has been an element of under declaration or fraud, the law is open. So save yourself that pain and voluntarily disclose and pay taxes going forward.”
Musinguzi also addressed the prevalent under-declaration of rental income in Kampala, where discrepancies between receipts and actual payments are significant.
“We have already been serving assessments and know that the degree of underdeclaration has been high,” he said, adding, “This is really an opportunity for the taxpayers we have not yet reached, because this technology is available, so it is only a matter of time before the landlords who are not compliant start paying their fair share.”
Musinguzi notes that engagement with landlords have been ongoing to encourage compliance, and while there has been improved rental tax compliance in the last two years, there is still room for further enhancement.
Muzungyo also mentioned ongoing engagements with entities such as the ARCADE Association, to tap into the untapped potential in the sector.
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