Kampala, Uganda | URN | Kampala Capital City Authority [KCCA] will implement the proposed new rates of property tax come next financial year.
The new rates that the KCCA council passed in January 2020 include the four per cent of the taxable value of properties generating five million and below and six per cent for properties attracting revenue above five million shillings.
Currently, KCCA charges a flat rate of 6 per cent of the taxable value on commercial properties. Taxable value is 74 per cent of the total revenue generated from the property.
Sam Sserunkuma, the director revenue collection says since they had already planned using the old rates, they cannot switch to the new rates until the following financial year. He says their system is automated and shall make the required adjustments at the appropriate time.
The new tax rates will reduce KCCA earnings yet this tax is the highest single source of revenue for the authority. It contributes over 30 Billion Shillings to the 100 Billion Shillings local collections of the authority.
Sserunkuma anticipates that lower rates shall increase compliance to an extent that there will be no lose made but an increment in collections.
He says they are also conducting a study to see how best they can increase collections and ease payments by taxpayers.
Although KCCA holds property tax as their highest source of local collects, it still faces challenges like tax defaulting.
According to the property tax valuation exercise that KCCA conducted between 2016 and 2019, KCCA has the potential to collect Shillings 77.7 billion in property tax.