URA Urges Landlords to Declare Rental Properties or Face Penalties

Mbarara, Uganda — The Uganda Revenue Authority (URA) has called on landlords across the country to voluntarily declare their rental properties and register for rental income tax, warning of steep penalties for non-compliance.

Speaking at a recent tax sensitization meeting in Mbarara and Lyantonde, Isaac Aijuka, the Acting Supervisor for Tax Education Outreach in South Western Uganda, urged property owners to take advantage of URA’s voluntary disclosure programme.

“Declare all the rooms from which you receive rent, whether in Uganda or abroad,” Aijuka said. “If URA discovers this through its intelligence, you will face substantial penalties.”

Rental income tax, Aijuka explained, is levied on immovable property such as residential and commercial buildings, and landlords are required to self-declare their expected rental earnings at the start of each financial year. He also demonstrated how URA calculates rental income tax and urged landlords to maintain proper records of rental payments.

“Rental payment records help determine how much you will collect by the end of the year,” he said. “When you file a final tax return without such records, URA will forcefully assess you, which is not what we desire. We want you to comply voluntarily.”

Samuel Tayebwa, Mbarara City Principal Tax Officer, clarified that rental income tax should not be confused with property tax. “Rental income tax is charged by URA on the rent earned from letting a property, while property tax is charged by the city council on buildings constructed within the city,” he said, noting that both levies are constitutional.

Landlords in attendance were encouraged to engage in tax planning and use URA’s digital platforms to better understand their obligations.

Background on Rental Income Tax in Uganda

Uganda introduced rental income tax to widen its tax base and improve revenue generation from the real estate sector, which has seen significant growth in recent years. Under the current regime, individuals are taxed at a rate of 12% on rental income after allowable expenses, while non-individuals (such as companies) pay 30% on profits from rental property.

However, tax compliance in the rental sector remains low. According to previous URA reports, many landlords fail to declare their rental earnings, depriving the government of significant revenue. The URA has since increased its enforcement efforts, including using satellite imagery, utility data, and physical inspections to track undeclared properties.

The voluntary disclosure programme is part of URA’s broader initiative to encourage compliance while reducing the burden of enforcement. By declaring rental income early and maintaining proper records, landlords can avoid audits and penalties, and contribute to national development through taxation.