URA Warns Landlords as Rental Tax Collections Decline

The Uganda Revenue Authority (URA) has expressed concern over a one percent drop in rental income tax collections during the 2025/2026 financial year, a trend that contrasts sharply with a 14 percent average growth observed in other significant tax sectors.

Commissioner General John Rujoki Musinguzi highlighted this during an engagement with landlords in Kampala, emphasizing that the real estate sector, a substantial contributor to Uganda’s GDP, is not reflecting its growth in tax revenue. He attributed the shortfall to issues such as under-declaring rental income, failing to issue electronic receipts, and general weaknesses in tax administration.

Musinguzi cautioned that non-compliance, including the failure to issue Electronic Fiscal Receipting and Invoicing Solution (EFRIS) invoices and misreporting income, constitutes legal violations. He stressed that EFRIS records must accurately reflect tenancy agreements and rental payments, with declared income aligning with all issued receipts.

These warnings come as URA intensifies efforts to integrate more landlords into the digital tax system. Musinguzi pointed out that Uganda’s low tax-to-GDP ratio of 14.3 percent makes tax compliance critical, especially with government debt servicing consuming a significant portion of collected revenue.

Discussions with landlords, including prominent figures like Godfrey Kirumira and Sudhir Ruparelia, focused on improving compliance. Kirumira acknowledged the importance of digital tax administration, viewing EFRIS as a tool for better tax management rather than a new levy. Some property owners, like Freeman Kiyimba, requested more time for landlords to fully adopt the EFRIS system.

The URA has pledged to provide technical support to assist property owners in registering and utilizing EFRIS, aiming to enhance transparency and revenue collection in the sector.