URA sounds alarm on rental tax decline, seeks landlords’ cooperation

Uganda Revenue Authority (URA) Commissioner General John R. Musinguzi has called for a renewed partnership with Kampala’s landlords to reverse declining compliance in the rental property sector, saying stronger collaboration rather than enforcement should be the first response to the widening tax gap.

Musinguzi made the remarks on Thursday during a face-to-face engagement with landlords, property developers and other real estate stakeholders in Kampala, where the tax authority sought to understand challenges affecting rental income tax compliance.

He said the real estate sector has become an important pillar of Uganda’s economy, contributing an estimated **6–7% of GDP**, creating employment, providing markets for locally manufactured products and supporting the financial sector.

Yet, despite the sector’s rapid growth, Musinguzi said rental income tax collections moved in the opposite direction.

“Last financial year all taxes grew by double digit, with an average growth of about 14%, but the rental income tax head declined by 1%,” he said.

He said the meeting was therefore intended to create a candid conversation between URA and landlords on the reasons behind the decline, rather than to apportion blame or victimise taxpayers.

“While we have both failed in playing our parts, may this meeting be a start of a good foundation,” Musinguzi said.

EFRIS becomes central to rental compliance

A major issue at the engagement was the implementation of the Electronic Fiscal Receipting and Invoicing Solution (EFRIS), which URA says is intended to improve transparency and create accurate records of rental transactions.

Real estate activities were included among the sectors whose non-VAT-registered taxpayers became subject to mandatory EFRIS requirements from July 1, 2025, subject to specified exemptions.

URA has also recently intensified its message to tenants, asking them to demand EFRIS receipts from landlords for every rent payment. The authority says the receipts provide an official record of rental expenditure and can support eligible rental expense and input-tax claims.

Musinguzi told landlords that URA would provide practical support rather than simply demand compliance.

“If we agree today and work together on the front of compliance, URA will dedicate a team to support you on EFRIS onboarding and provide written guidance and physical engagements,” he said.

He also urged landlords to designate a representative to maintain communication with URA and to issue EFRIS receipts reflecting the actual rent paid.

He singled out businessman *lDr. Sudhir Ruparelia among landlords who have embraced EFRIS, describing such early adoption as an example for others.

URA’s current guidance states that EFRIS is a digital system for recording transactions and transmitting transaction information to the authority in real time.

Landlords call for continuous dialogue

Ambassador Godfrey Kirumira, who represented the landlords at the engagement, welcomed the initiative but called for regular dialogue between URA and the real estate sector.

He argued that buildings and other property investments represent years of borrowing, personal savings, family investment and business risk, while also generating employment and expanding the government’s tax base.

“The cow you want to milk, you must feed it first,” Kirumira said, urging government to protect the tax base as it seeks to increase revenue.

He said landlords were prepared to participate in the digitalisation of tax administration but wanted implementation to recognise the realities of the property market.

“We understand EFRIS is not a tax but rather a solution,” Kirumira said. “We accept the rental sector, like other sectors of the economy, must understand digital tax and are willing to participate in this transition willingly. However, implementation must recognise the realities on the ground.”

He also called for a dedicated URA team that understands the real estate industry and can provide guidance before compliance disputes arise.

“When a taxpayer is properly guided, compliance becomes a culture,” he said.

URA sets out landlord obligations

Commissioner for Domestic Taxes Denis Kugonza said the engagement had been organised partly because of recurring compliance gaps identified among Kampala city landlords.

He urged landlords to maintain transparent operations and complete records across the rental chain.

According to Kugonza, landlords are expected to:

• Declare all properties;
• Issue EFRIS receipts;
• Maintain compliant agreements;
• Keep taxable records;
• File returns on time; and
• Make truthful claims.

“All of us pay taxes, including URA staff. Taxes are not only for the business community,” Kugonza said.

Assistant Commissioner Domestic Taxes Compliance Garry Kizito said taxpayers have the right to assess themselves, but warned that the right is abused when income is deliberately under-declared.

He said the law allows URA to review self-assessments within the prescribed period and take action where fraud is established.

Assistant Commissioner Client Services Christine Mirembe said additional assessments are legally provided for and reiterated that tenants should receive EFRIS receipts for their rental payments.

She also challenged businesses to incorporate tax planning into their operations instead of treating tax as an afterthought.

“One issue we have identified among ourselves as Ugandans is that whenever we start businesses, we never plan for taxes. They always come as an afterthought,” Mirembe said.

URA targets higher tax-to-GDP ratio

Musinguzi placed the rental sector discussion within Uganda’s wider revenue mobilisation challenge.

He said Uganda’s tax-to-GDP ratio currently stands at about 14%, while debt servicing consumes roughly 40% of collected revenue, according to his remarks.

URA’s ambition, he said, is to raise the tax-to-GDP ratio to at least 25% in the short term, with the real economy expected to play a major role in expanding the tax base.

For landlords, the immediate challenge is to close compliance gaps while ensuring that the tax administration system reflects the realities of property investment.

URA’s own guidance says rental income must be declared through self-assessment, while the authority may use third-party information, field inspections and taxpayer returns to verify declarations.

Musinguzi said enforcement remains available where dialogue and support fail, but stressed that it would not be URA’s first choice.

“When dialogue does not work, then enforcement comes into play. However, it will never be our first priority,” he said.

The engagement comes as URA expands its focus on real estate compliance, including a dedicated Real Estate Tax Office and intensified public messaging around EFRIS receipts.

For the landlords and URA, the emerging message is that Uganda’s growing property market must also become a stronger and more transparent contributor to domestic revenue, through a relationship built around compliance, guidance and continuous dialogue rather than confrontation.