Every Investor or wealthier personalisties particularly in Real estates and run business of commercial or residential properties in Kampala and other Urban municipalities must know about property taxes or it might you affect real bad.
22/06/2024
By Joseph Kiggundu
Governing law:
Local government rating Act 2005 as amended, the local government (rating) act 2005, property rate is levied on property or hereditament, that is "any physical attachment to land or building (industrial or non industrial) or structure of any kind excluding vacant site. It is a tax on all immovable property or buildings, commercially managed like schools, rented shops, rented houses,factories, hotels, public and private universities and any part of which is used for the purpose of the business even if its the owner occupied.
Property rates should be distinguished from the ground rent. Unlike property rates, ground rent is a charge on land leased out by the authority whether developed or not.
Brief definitions:
Gross rate; Means the rent at which the property might reasonably be exepected to let annually, if the tenent undertook to pay conservncy fees, wter rates and all other overhead costs. (The total income that is expected from a ratable property annually)
Ratable value: Means the net annaual rental value of property ascertained in accordancewith local Government rating act less a conservancy allowance. Currently, this allowance stands at 22%
Rate per annum: Means amount levied annually on a property, usually betweeen 0 and 12% of the ratable value with a minimum charge of ugx 2000/=
Property: means immovable property including building or structure of any kind excluding vacant sites.
Why pay for property rates?
All residents of Kampala require and benefit from certain services from KCCA such as road construction and maintenance, street lighting, anti malaria, garbage corrections, anyway am not here to triumph local governments propaganda but its neccessary to taxes for smooth operations and to avoid incoviniences from the authorities.
Who is eligible to pay property rates?
Section 6(1) of the local government (rating) act provides that "that the person liable for payment of the rate shall be the owner of the property in respect of which the assesment is made". Therefore, anyone who owns a building which is used for commercial purposes (including residential rented properties) is eligible to pay.
How do i pay?
Demand notes are issued to the property owners indicating the amounts payable for the given property. Payment can be made by way of Electronic Funds Transfer(EFT) or bank drafts, or to a bank of one's convienence or choice up on obtaining a Payment Advice Form (PAF) or through mobile money.
What happens if i fail to pay or to pay in time?
If a property owner fails to pay his or her property taxes, KCCA or other municipals recovers these funds through the fpllowing ways:
1. Recovery by warrant: a) If a rate is not paid by the date appointed for that purpose, KCCA may cause a demand notice to be served upon the person liable, requiring him or her to pay the rate together with interest, if any, on that rate within two months after the service of the notice.
b) If, after the service of the demand notice, the amount is not paid within two months, KCCA may apply to the magistrate having jurisdiction within the area where the property is situated for a summary warrant to recover the amount from the liable.
c) The magistrate shall grant the warrant upon satisfaction that the person sought to be proceeded against is the person liable to pay the amount is due from him or her and tgat he or she has been duly served with a demand notice.
d) Every warrant granted under sub section(4) shall be excuted as if it were a writ of execution issued by the court of the magistrate granting it.
2. Recovery by action: a) KCCA may bring an action for the recovery of the amount of the rate and interest, if any, without serving a demand notice over a property. b) The action above shall be effected within six years after the rate became due.
3. Recovery from tenants and current occupiers: a) Where the rates in respect of a property are in arrears, KCCA may serve upon any person paying rent or any other periodic payment in respect of that property or any part of it, notice stating the amount of such arrears and interest, if any, and requiring future payments of rent or any other periodic payments to be made directly to the authority until those arrears and interest have been duly paid.
b) The notice to be served undersubsection(1) shall operate to transfer to KCCA the right to recover, receive and give discharge for rent or periodic payment refferred to in subsection.
c) The KCCA shall also serve the notice reffered to in subsection(1) on the person liable to pay the rate.
d) No person shall be required to pay any money under subsection(1) before it is due to the person liable to pay the rate.
e) For the purpose of clarity, any payment received from a person to whom a notice is served under subsection(1) shall be credited to the person liable to pay the rate, in respect of the arrears of the rate and the person who pays any money as a result of any notice served on him or under subsection(1) shall be discharge from his or her liability to the person liable to pay the rate to the extent of the payment.
How do i prove that the amount reflected on the demand note is genuine?
The content of a valuation list as for the time being in force or an extract from any such list may be proved by the production of a copy of the list or the extract of it certified by the valuation office or Executive Director of KCCA or Town Clerk of KCCA division urban councils to be true copy.
What happens if i buy (purchase) a property from someone or company?
1. Buyer to certify himself or herself about arrears; It shall be the right of the buyer to demand a certification of arrears from the seller, and if the seller does not produce the certificate, the buyer may inquire from the authority about the arrears of taxes on the property.
2. Prohibition against transfer of property in arrears of rate; It might disturb or give a headache in transfer of any property registered under any law for the time being in force, for the registration of titles or documents unless a certificate that no arrears of rates are due in respect of that property has been issued by the authority of the area where the property is situated.