Kawempe Division landlords want property tax relaxed

Landlords from Kawempe Division have asked Kampala Capital City Authority (KCCA) to reconsider property tax levied on their buildings during the recently concluded property valuation exercise.
They are also protesting the valuation of residential buildings, something they argue is against the property Rating Act, which exempts all residential buildings.
They made the remarks yesterday at Kawempe Urban Council headquarters before Kampala Lord Mayor Erias Lukwago whom they had petitioned, challenging the valuation exercise.
“It’s true we are supposed to pay property tax but the manner in which the valuation of properties was done isn’t fair at all. For instance, some of the commercial buildings in Kawempe usually flood whenever it rains and tenants have since deserted them but the valuation team overlooked this. They instead went ahead and levied heavy taxes,” said Ms Saudah Namwanje, a landlord in Bwaise III zone.

The tax
Property tax is an annual levy on any commercial property (building) that exists within the jurisdiction of the city.
It is charged in fulfilment of the periodic statutory requirement of the Local Government (Rating) Act 2005. The money collected caters for infrastructure development, among other services.
The Act gives local governments leeway to charge from 1-12 per cent of the money made annually on commercial properties in the city.
The appropriate percentage is set by elected leaders depending on the income, which commercial properties make. But the percentages charged also vary to different city suburbs.
For instance, KCCA charges six per cent property tax while other surrounding municipalities such as Kira, Nansana and Mukono, among others, charge a higher percentage.
KCCA covers five city divisions of Kampala central, Nakawa, Kawempe, Rubaga and Makindye.
During the engagement with the landlords, Mr Lukwago explained that while the former are required by law to pay property tax, it must be charged according to how much money a commercial building generates annually.
He also noted that there’s a Valuation Court at City Hall provided for by the Rating Act. This handles all complaints from landlords, who might be dissatisfied by the amount of money levied on their properties during valuation exercise.
After the valuation, KCCA generates a list of all properties and displays it for public viewing and scrutiny to ascertain the tax levied and other uncoordinated details of a property.
If a landlord has a complaint about the list, they petition the Valuation Court and a date is set for hearing.
When court makes its ruling, a landlord is free to appeal to the High court in case they are not satisfied with the tax levied on their property. The Valuation Court is currently headed by senior lawyer Wandera Ogalo.
However, Mr Muhammad Mutazindwa, another landlord, accused his colleagues of deliberately refusing to declare income returns of their properties to KCCA.
“If you do not declare the income returns, KCCA might end up levying any amount yet your rentable space is small. The other challenge is that some politicians have been mobilising landlords to reject this tax and that’s why you see them up in arms,” he argued.

Valuation purpose
KCCA has been valuating properties across the five divisions to ascertain how much tax they collect and to update the valuation roll. Valuation of properties in Kampala was last done in 2014 and since then, KCCA has been collecting Shs20b.
But with the new valuation, annual property tax is projected at Shs50b due to the increase in the number of commercial buildings in the city.
The head of KCCA valuation team, Mr Aloysius Gonzanga, notes that dissatisfied landlords must utilise the Valuation Court to hear their concerns.
“Our role is to value properties and levy taxes but a landlord complains to court and the tax is reduced, we go by it. Let them use this court instead of crying foul,” he said.
He further revealed that some landlords were not willing to offer details of their property to the valuation team, with others lying that their buildings are residential yet in actual sense they are commercial.
However, Mr Gonzaga did not offer details of how many properties they have valued across the five divisions, saying he needed to check the figures.

How it is determined

Mr Gonzanga says property tax is determined in two ways. The first being for residential rented houses such as rentals or apartments, which he says, they compute the total amount of money such a building makes annually after all other expences have been made. KCCA then taxes 6 per cent of the remaining amount.
For commercial buildings such as arcades, Mr Gonzanga revealed that they measure the space in square metres per floor and the amount of money each floor makes annually.
However, areas within the building that does not constitute commercial space are not measured.
When the total amount is derived, they deduct all the expences incurred by the landlord on the building and then tax 6 per cent of the net amount.
The values of property rates are determined by qualified and registered valuation surveyors.
Property tax excludes residential houses, registered worship places such as Churches and Mosques, local council offices, recreational centres and the President’s office and embassies.