The Uganda Revenue Authority (URA) has mandated that all owners of commercial buildings utilize electronic receipts as a means of paying rent in order to mitigate revenue losses resulting from tax evasion in the rental income industry.
The issue of tax evasion has emerged as a result of landlords’ imprecise income reporting procedures.
In a Kampala meeting with owners of commercial buildings, URA Commissioner General John Musingizi stressed the importance of improving revenue collection and closing loopholes.
“Though there has been an increase in collections from this sector—which have doubled compared to last year’s performance—a lot of money is still outstanding, and we want to maximize this,” he said.
According to Musingizi, a recent tax inquiry operation exposed an astounding 50 billion Shillings in losses in this industry.
These significant funds came from just seven of the audited structures. “I have now audited seven arcades, and I have collected 50 billion shillings in total. I could close all of the arcades if I audit them all. Therefore, let’s act morally moving forward,” he said.
It was stressed by Musingizi that landlords of commercial buildings should start providing e-receipts in order to guarantee the correctness of income declarations that are filed to the URA.
When e-receipts were first implemented, the purpose of the implementation was to combat tax leakage, specifically withholding tax.
Large retail stores and supermarkets were the first to adopt this idea. It entails integrating the tax agents’ digital systems with the URA’s, which are the landlords in the context of rental tax.
It is mandatory for landlords to give receipts in accordance with the legislation and accept rental payments via their bank accounts.
During the discussion, a well-known city landlord named Moses Kalungi emphasized his willingness to provide e-receipts but also voiced worries about the aggressive tax collection tactics used by URA employees.
“Why can’t someone wait patiently for my books of account before assessing my allowable deductions?” he said. I’m willing to pay my tax obligation if you can demonstrate that they are not real.
In addition to intimidating and harassing landlords, Kalungi claims that URA officers frequently make tax computation errors that cause landlords to overpay.
URA’s tax administration strategy can be unduly harsh at times, even if a taxpayer has a history of compliance.
Other subjects covered in the meeting included the necessity of stepping up awareness campaigns among landlords, initiatives to improve industry compliance, and prodding individuals who owe taxes to take advantage of the interest waiver option—which runs out on December 31, 2023—as part of the voluntary disclosure agreement.