Traders leasing shops in more than 30 arcades in Kampala are expressing significant frustration and are considering shutting down their businesses once more after their landlords, property moguls Drake Lubega, Bosco Muwonge, and Matovu Younga, decided to pass the VAT tax burden onto them.
According to information obtained by this website, as of February, every shop proprietor is required to pay the 18% VAT on the same day they pay their rent, and those who fail or refuse to comply must vacate their premises immediately.
Furthermore, if they intend to protest, they should not expect to rent any shops in any of their arcades in the future.
In the meantime, months after taking over the Freedom Centre, reports suggest that tycoon David Mutebi compelled his tenants to sign agreements acknowledging his proposed rent increases of Shs800k per shop.
As per information from the Uganda Revenue Authority (URA) that we have reviewed, after registering, landlords must charge their tenants VAT at a rate of 18% based on rental income. The VAT collected is submitted to the URA but is not an expense for the landlord.
This isn’t the first instance of traders in Kampala’s arcades feeling disgruntled by the hefty charges imposed by their respective landlords. On several occasions, many have resorted to strikes, disrupting commerce in Kampala. In some cases, President Museveni’s intervention has been necessary to restore order.
In addition to the frequent and sudden rent hikes from landlords, these traders also face various taxes from other government entities, including the Uganda Revenue Authority (URA).
A notable example is the Electronic Fiscal Receipting and Invoice Solution (EFRIS), which was implemented last year.
This led to a standstill in Kampala, resulting in traders closing their shops and paralyzing businesses nationwide. However, after two meetings with the President, the situation was clearly explained and resolved.
