URA Steps Out of Line With Rental taxes

Mable Twegumye Zake - @MableTwegumye

Mable Twegumye Zake

The tax system in Uganda charges you for many things that you already pay for but introduces new taxes in disguise.

Take for instance the indirect taxes you will pay through the cost of raw materials for construction of domestic rentals. How long will it take to get back all that money through rental income from tenants if you acquired a loan to construct them and at the same time start reaping profits? Truth is the loan from the bank is taxed, raw materials are taxed and even the rental income is taxed! Will you still be alive to enjoy those profits exclusively with the rate at which URA is introducing new taxes?

Your salary is taxed at the end the month from PAYE then subjected to a swam of VAT through each purchase you will make from foodstuffs to transport fares that may keep varying depending on the “dollar” right?

How much of your income do you save for your own benefits that may include setting up rentals to support your well being if you have rental fees, school fees, bank charges, medical fees, etc. If at the end of the day your take-home isn’t enough to sustain your needs, the loan-syndromme will kick in.

There are Ugandans who struggle for a period of ten years or more to construct a home and be saved from the menace that is RENT!

Now after incurring the costs on their income for years to finish up residence and the rentals; you sigh right? Thinking now you will balance up the income in the long run get back what you invested and enjoy not even the dividends but STABILITY, then the taxation on RENTAL INCOME!!!!

Domestic landlords in Kampala have been enduring this pain for a few years now, however URA recently announced the countrywide uniformity to register all landlords and trust me I predict the same woes in the near future that commercial real estate landlords battle with tenants or even worse.

The menace that is rent is part payment for loans, the basic responsibilities that never go away or for a secure living that is every citizen's right.

Before one starts to think, well all my struggles were worth it, URA follows you into your home to take some of that collection too which is way over reaching into our pockets.

How about the tenants who run away in arrears of 3 or more months?

Rentals tend go for months without tenants yet a landlord declared their annual income tax to URA. What about the extra cost spent on renovations that may arise.

That means if a landlord makes losses, he still needs to incur the standard annual URA rental income taxes nonetheless meaning he will find himself subjecting his hard earned salary or other income generating activities which are also taxed so the citizens are reduced to being slaves to URA because of the vicious cycle

Take for instance the retired citizens of this country; they paid their dues to URA already but are dependant on incomes from rentals to survive and why not enjoy retirement if their collections are worthy of celebration?

URA is reaching into their collections too, saying well...well...well....until you die, we need some of that money too! Must they also die POOR?

Landlords will increase the rental fees but it won’t make a big difference anyway since the more taxes they will pay, then tenants will feel the pinch on their salaries and their standard of living; their dream of ever living a stable life will loom even further but will keep saying, “Gavumenti Etuyambe...”

I don’t even want to imagine these conflicts between URA and Landlords over the under declaration of their Rental income status then URA making their own estimate. This will result into domestic landlords increasing rent of course; will domestic tenants also call for demonstrations and strikes like the commercial tenants do in Kampala?

Oh please spare us and let Ugandans live a little after all the tax burden is already heavy on their shoulders because you tax their income from all corners and soon they won’t be able to breathe!

Dalton Kaweesa - @DaltonKaweesa

Dalton Kaweesa

Domestic rental tax is under serious attack from different people; politicians, business community and a few of us who still live in a bedsitter - with resident fear of the repercussion on our monthly levy by the landlords.

This is the interesting conversations from the washed and unwashed friends while I sip away to alcohol free beverage.

Some people argue that tax is a form of theft from people who have earned their wealth or income through hard work. This generic argument is complemented with a second, that “The people who run my government are all thieves.”

Is Tax theft, really?

This forms my basis of argument for the rental tax today, and employ all those against it to rethink in this direction. if you receive something in return, services provided: roads, educated workforces, police then you cant claim that that is theft since it is paying civil servant.

Through what some people call theft , at least has provided for the bare minimum of services for instance payment of teachers or police for criminals to be kept at at bay. It is a painful process , but what is the point of building a good buildings that are not secure.

Imagine there were no taxes in this country what would happen of the roads, the soldiers that keep the territorial integrity of this country – just imagine!

Let me be more specific on the area of domestic rentals. I heard some of my colleagues say that government is taxing them left right and centre – even the rentals established are being taxed , something they think is meant to keep them in abject poverty.

While Uganda’s housing units grows by 300, 000 per year , a close look at these figure betrays one aspect that many of the mushrooming apartments are constructed with the source of money being suspect. A tour of Kyaliwajala which ten years a go was a bush and village at that , demonstrates Uganda’s appetite for real estate; however the ownership is largely by government officials or kin close to the power. The argument here is that the people who most likely stole money from the tax payer and invested heavily in real estate instead of staking the money in offshore companies, the tax somewhat helps us to reclaim the money.

If the person got money in the wrong mechanism, this offers light to pay back to the government of Uganda through rental rent.

Come the fear of the common man about the tax. People who rent habour the feeling that the rent fee will be certainly hiked. This is more theoretical because unless the landlord doesn’t do good mathematics. The higher you impose taxes on rentals the higher the revenue, the tax body will come . Generally the tenants are safe with this kind of tax and most likely zoning of these places bring about balanced levies. More often than not URA and KCCA have approved of unilateral taxes failing to be alive to the sizes of people’s businesses.

In simple language, since one’s area code attracts a given level, the tenants are protected since the increment in the rent doesn’t necessarily mean the land lord is going to gain more, but the taxman.

I am also convinced that the whole outrage on rental tax is born out of people having limited information. I have for instance heard queries of the fact that some rentals go months without an occupant , and a question why tax them? This is like asking why tax a factory that has not taken off. The truth of the matter, If URA is not infiltrated with criminals . according to their missive, they would only tax the income, but if there isn’t any received you will definitely not be paying any tax.

So for all those crying foul over this tax, first reflect on the services we get from police the army and other stakeholder. Let the tax come.