Impact of Proposed Tax on Sale of Land

Apex Business School

May 3, 2024

5 min read

The Ugandan government’s recent proposal to impose a 5% tax on gains from the voluntary disposal of non-business assets, particularly land in cities and municipalities, has sent ripples through the real estate sector and beyond. This measure, part of a broader tax amendment bill, is aimed at bolstering the nation’s revenue by an estimated UGX1.9 trillion, contributing significantly to the financial year 2024/25’s budget.

Impact of Proposed Tax on Sale of Land

The proposed amendment under section 3 of the Income Tax (Amendment) Bill, 2024, seeks to tax gains from the sale of land, excluding the principal place of residence, and rental properties subject to rental tax under section 5 of the Income Tax Act. This move is not without precedent; last year, a similar proposal was introduced but later withdrawn in favor of maintaining the capital gains tax on the disposal of business assets

Find out more at https://www.icpau.co.ug/news/impact-proposed-tax-sale-land

The introduction of this tax could have far-reaching consequences. Property developers and investors may find their profit margins squeezed, potentially leading to a slowdown in the development of new projects. Homeowners looking to sell land could face reduced net gains, while buyers might encounter increased costs as sellers pass on the tax burden.

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The tax could also influence the broader economy. By increasing the cost of land transactions, the government risks dampening the real estate market’s dynamism. However, the additional revenue could provide much-needed funds for public services and infrastructure, contributing to the country’s long-term growth.

Find out more at https://www.icpau.co.ug/news/impact-proposed-tax-sale-land

As the government navigates the delicate balance between revenue generation and economic stimulation, the proposed tax on land sales will undoubtedly be a topic of intense debate among policymakers, industry players, and the public. The outcome of this proposal will serve as a litmus test for the government’s fiscal strategies and their alignment with the nation’s development goals.