TYPES OF PROPERTY TAXES IN UGANDA
* Property tax
* Rental income tax
* Capital gains tax
* Withholding tax
* Stamp duty
Property Tax (Rates)
Property rates in Uganda are levied by local government councils. Property tax is an old tax but almost died a natural death until the enactment of Local government (rating) Act in 2005, when it was revived and became active. The current rating is governed by the local governments rates decree of 1979. This Act provides the mechanism for carrying out the valuation, assesment billing and collection of rates, and applies to kampala city council,muncipal councils,town councils and districts. This Act eliminates the monopoly of the chief government valuer and allows local governements to appoint their own choice of qualified registered valuer. The Act is supplemented by the Local Governments rating Regulations, 2005.
Rental income tax.
Rental income is the total amount derived and firstly amended in the financial year 2017/18 by Uganda Revenue Authority and has been successful. This tax is only associated with landlords and companies investing in rental investments. Every landlord is subjected to paying an annual rental income tax for his property and failure to pay may be forced or imprisoned for less than 6 months or fine of 2 million shillings
NOTE: Rental income tax is only paid when a person is letting out their immovable property (land or building) to another person and is earning income from it, but property tax is paid by a landlord for a commercial building (excludes residential) as long as it occupied it does not matter even if is the landlord occupying it.
Why do you need to submit a Tax Return.
Timely submission of tax returns enables you to avoid penalties and other legal consequences.Submission of accurate information improves your risk rating levels with URA. Submission of VAT returns that requires a refund from URA provides the basis for a refund if one wishes to have a cash refund of taxes paid in excess.
Capital Gain Tax in Uganda.
Capital Gains Tax is the tax chargeable on the gains that accrue to an individual or a company on the tyransfer of property sitauted in Uganda. The rate of the tax is 30 percent (30%) on the capital gains made on the sale of the property.
What exactly is the Capital Gains Tax?
The capital gains tax is the tax that is paid on the profits that you obtain once you sell any kind of asset like a property or land or from an investment in the Ugandan territory. Whenever the sale value is greater than the price you paid for the investment asset for its acquistion,capital gains tax will be paid on that difference or the profit.
What is Withholding Tax?
Withholding tax is a form of income tax deducted at source by one person upon effecting a payment to another. The withholding agent is supposed to make the payment tax.
Any person buying land, building or any piece of property purchased mostly for business use is subject to the tax. Land for business company and cooperations. This tax policy is spear headed by the buyer withholding tax, it should be withheld at the point of making the payment whether cash or in any other form.
Individuals also inccur Withholding tax on payment of interests made to them. The withholding tax is at a rate of 15%,however, individuals are not obligated to withhold tax on payments made by them to taxable persons.
Withholding tax is also charged on the importation of goods into the country, the tax charged is at a rate of 6% on the value of goods imported individuals are required to maintain records of the WITHHOLDING TAX paid on the imported goods.
Withholding tax calculation when paying
Its the 6% on the gross payment is the amount of money to be paid as tax for your transaction and 15% on a payment or transaction with a non Ugandan. This return must be filed by the 15th day of the month following the purchase . Should the purchaser fail to comply or file the return by the due dfate,he she is liable to pay a penalty for late filing.The purchaser or buyer of the property who fails to file by the due is liable to fines or imprisonment or both.
What is Stamp Duty Tax?
Stamp duty is a tax that is Lieved on single property purchaseor documents. Stamp duty fees are paid to the government to authenticate documents and make them legally binding in courts of law.This is paid at the point of transfer of title of the said land from the seller to the buyerbased on the value of the land as assessed by the Chief Government Value.
The stamp duty rate?
Stamp duty of 1.5% applies on all transfers, including transfer of shares and property . Stamp duty of 2% applies on exchange of properties. The value of property is determined by the chief government valuer. The buyer of the property or land which needs stamp duty for accesing is required to pay for the stamp duty.
Tags; Uganda real estates, ministry of Land, Houses for Sale