Rental income tax basics in Uganda
In brief
Rent is taxed. Under the Income Tax Act, Cap. 338, rental tax is imposed on the rental income of a person (s.5), and the rental income of a resident individual is charged to rental tax separately from their other income, at the rate set in Part II of Schedule 4 to the Act (s.5(2)) — currently nil on gross rent up to Ushs. 2,820,000 a year and 12% above that; a company's rental income is taxed as part of its chargeable income at the company rate in Part III of Schedule 4 (s.7). Where declared rent looks understated, deemed rental values under the Income Tax (Rental Rates) Regulations, 2020 may apply. Rates and thresholds change with the annual tax amendments — confirm the current figures.
1. Governing law
The Income Tax Act, Cap. 338 treats rental income specially. Section 5 imposes rental tax and provides that the rental income of a resident individual for a year of income is charged to rental tax at the rate prescribed in Part II of Schedule 4 to the Act, separately from the individual's other income; the procedure for rental tax is in Part XIII (s.124). A company, by contrast, is charged income tax on its chargeable income (which includes rental income) at the company rate prescribed in Part III of Schedule 4 (s.7). To curb under-declaration, the Minister may prescribe deemed rental values, and the Income Tax (Rental Rates) Regulations, 2020 set rates by reference to the property, so that a taxpayer may be assessed on a deemed rental income where the declared rent is lower. The exact rental-tax rate, the allowable deductions and the tax-free threshold for individuals are set in Schedule 4 and have been changed by successive Income Tax (Amendment) Acts, so the current percentage and threshold must be confirmed against the latest Schedule 4 before relying on them. Statutory text verified against the consolidated Laws of Uganda as at 31 December 2023. Sourced from the Uganda Legal Information Institute (ulii.org).
2. Key statutes & rules
- Income Tax Act, Cap. 338 — s.5 (rental tax imposed; a resident individual's rental income charged to rental tax at the rate in Part II of Schedule 4, separately from other income); s.7 (a company's chargeable income, including rental income, taxed at the company rate in Part III of Schedule 4); s.124 (procedure relating to rental tax); Schedule 4 (the rates — amendment-dependent, verify).
- Income Tax (Rental Rates) Regulations, 2020 — deemed rental values where declared rent is understated.
3. Practical guidance
Separate the streams: a resident individual's rental income is taxed as rental tax on its own, not lumped with employment or business income (s.5).
Confirm the current rate, deductions and threshold in Schedule 4 — they change with the annual amendments, so do not rely on an old percentage.
Declare rent honestly: under-declaration can lead to assessment on a deemed rental value under the 2020 Regulations.
Companies: account for rental income within chargeable income at the company rate (s.7).
Keep tenancy agreements and receipts, file the rental-tax return, and object within 45 days if you disagree with an assessment (see the URA-objection guide).
This note is a practitioner orientation, not legal advice, and does not create an advocate–client relationship. Ugandan law changes and chapter and section numbers were revised in the 2023 Laws of Uganda. Verify every statute, rule and authority against the current primary source — and the specific facts of your matter — before filing or relying on it.