The Uganda Revenue Authority (URA) in the Daily Monitor dated 4th September mandated the Electronic Fiscal Receipting and Invoicing System (EFRIS) for business rental properties (In practice, the legal requirement is based on the turnover, i.e., 150 million and above), requiring EFRIS-generated receipts for rent payments related to shops, offices, and warehouses. This move is a significant leap in Uganda’s drive toward tax digitization efforts.
This rollout should give you a déjà vu moment as it echoes last year’s EFRIS enforcement in downtown Kampala, where traders pushed back initially but gradually adopted the system.
Implications for Stakeholders
For Tenants: Tenants will receive electronic receipts instead of handwritten ones, which enhances transparency and allows for accurate VAT claims. However, landlords may adjust rents to cover compliance costs.
For Landlords: This system reduces the risk of misreporting and fosters a fairer environment for compliant landlords, contributing to URA’s domestic revenue target of UGX37trillion for the year 2025/26 by minimizing revenue losses.
For Accountants and Auditors: Expect an increase in inquiries from landlords about compliance and setup. The traceability of rental income declarations will simplify audit processes and create opportunities for advising clients on digital compliance and improved record-keeping.
For URA: URA could automate the rental tax return, thereby reducing errors and tax evasion, but also, this enforcement will lead to increased revenue collection, as this will close one of the biggest gaps in rental income compliance.
Penalties for Non-Compliance
The taxpayer is liable to a penal tax equivalent to the tax due on or 8 million, whichever is higher, for not using EFRIS, and a Penal tax equivalent to the tax due on the goods or services or 6 million, whichever is higher, for failure to use an e-receipt/e-invoice. (Section 76 of the Tax Procedures Code Act (as Amended).
Conclusion
EFRIS has become a necessary standard in Uganda. This transition offers tenants, landlords, accountants, and auditors a valuable opportunity to embrace compliance, enhance transparency, and create genuine value in how rental income is tracked and analyzed.
Collins Ninsiima: Senior Associate
collins.ninsiima@jsamuelrichards.com
J Samuel Richards and Associates