Failure to pay tax on land transactions will cost Shs2m

Residential houses in Kampala. The notice seek to enhance enforcement as Uganda Revenue Authority seeks to close tax leakages across a number of sectors within the existing tax regime. PHOTO / EDGAR R BATTE 

What you need to know:

Stamp duty payable for each agreement or memorandum of agreement is Shs15,000.

Uganda Revenue Authority (URA) has said failure to pay stamp duty on agreements executed within Uganda in relation to purchase and transfer of property is an offense, which on conviction, attracts a penalty, imprisonment or both. 

 In a notice published last week, URA indicated that Section Three of the Stamp Duty Act, 2014, charges stamp duty on transfer or purchase of property such as land, payable by a person drawing, making or executing the instrument.  

“Therefore, any person who purchases or transfers property should present the agreement or memorandum of agreement together with the transfer and consent forms to URA for stamp duty assessment, payment, barcoding, and generation of stamp certificate,” the notice reads in part. 

 The notice further indicated that stamp duty payable for each agreement or memorandum of agreement is Shs15,000, while stamp duty on the transfer of land is at a rate of 1.5 percent of the total value of the land as determined by the chief government valuer. 

In an interview with Daily Monitor, URA’s manager public and corporate affairs, Mr Robert Wamala Lumanyika said: “Besides the land agreements, the other properties involved are loan agreements, Memorandum of Understanding and bond agreements.”

 The notice comes at a time when URA is under pressure to increase its tax revenue to Gross Domestic Product ratio, which over the years has stagnated at about 13 percent, amid increased demands.  
During the Budget reading last week, President Museveni also faulted URA for failure to expand the tax base despite the existing potential in a number of sectors. 

 Ministry of Finance Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi has also reiterated the need to mobilise more taxes through increased compliance in a number of sectors, among which include agriculture. 

 URA has on two separate occasions warned stakeholders in agriculture, music, arts and drama to ensure that they meet their tax obligations failure of which those found guilty will face penalties, imprisonment or both. 

 In the notice URA noted that “any instrument that is chargeable with duty shall not be admitted as evidence for any purpose unless stamp duty is paid and the instrument is duly stamped”, noting that any person who executes an instrument without payment of proper duty commits an offense and is liable on conviction to a fine of 100 currency points or imprisonment for a period not exceeding six months or both. Every currency point is equivalent to Shs20,000.

 In a separate notice, URA also indicated that all professional bodies are, under the law required to voluntarily declare all professional certificate licences executed within Uganda to the commissioner domestic taxes for onward tax assessment. 

 The law, under the Stamp Duty Act provides for a stamp duty at a rate of Shs100,000 for any professional certificate or license, which was introduced in the 2020 stamp duty amendments.