KCCA Council revises property tax rates

The Kampala Capital City Authority (KCCA) Council has introduced a one percent rate for tax on properties that generate less than Shs3 million annually.

The resolution stemmed from a proposal by the Central Executive Committee -CEC presented to the Standing Committee of the Revenue Collection Chaired by Councilor Faizol Nkugwa.

The proposal was tabled before the council by Nkugwa while presenting a report on the performance of the band system of property tax. According to the report, CEC proposed to the committee that property owners whose ratable value is above Shs5m pay 6 percent, and those whose ratable value is below five million but above three million pay 4 percent.

The proposal further indicated that property owners whose taxable value is below three million pay only one percent.

Previously, property owners who earn above five million were subjected to a 6 percent tax while those who earned below three million were subjected to a 4 percent tax.

The Deputy Lord Mayor, who is also the vice chairperson of the CEC, Doreen Nyanjura, says they proposed introducing another rate to protect low-income earners.   

According to the Local Government Act, local governments can charge a percentage not exceeding 12% of the taxable value of the property and a minimum of 2,000 shillings. The taxable value is 74% of the revenue generated by a property. Until 2020, KCCA ran a flat rate of six percent on the taxable value of all properties. In 2020, new rates were introduced, a 4 percent tax of taxable value imposed on properties generating below five million and 6 percent for properties attracting revenue of five million shillings and above.

The committee had however proposed a different ban system where owners who earn above 5 million would be subjected to a 6 percent tax, those earning below five million but not below two million would be taxed at 4 percent while those who earn below two million would pay one percent tax.

The Committee Chairperson Nkugwa reported that adopting the CEC proposal would cost the Authority a tax shortage of 5.16 billion shillings while the committee’s proposal would cause a shortfall of only 2.5 billion shillings. However, the majority of the councilors voted in favor of the CEC’s proposal, and was hence resolved. Property rate is charged on commercial buildings and is the biggest single revenue earner for KCCA contributing over 40 percent of the Authority’s Non-Tax Revenue.

Meanwhile, the same council also resolved to extend the time for the valuation court to hear complaints filed by some property owners from Nakawa division who raised objections to the valuation of their properties. The Court is meant to conclude the hearings in this month of June but because there are more complaints pending, the court had been added an extra month to perform its duties.