Stamp duty is charged in accordance with Section 3 of the Stamp Duty Act on a range of written or electronic instruments within and outside Uganda.

The Schedule 2 of the same Act provides for a list of dutiable instruments to include,interests in any property that is transferred or leased to any person which must be stamped and taxes deducted and paid to the Government. 

URA’s Notice

On 15th June 2023, URA issued a public notice as a reminder to the general public in regards to payment of stamp duty on purchase and transfer of property.
The Transferor must present the agreement or memorandum of agreement together with Transfer and consent forms to URA for stamp duty assessment,payment, barcoding and generation of Stamp duty certificate.

Key definitions

1. Executed and execution- used with reference to instruments, mean "signed" and "signature" respectively

2. Instrument- includes a document by which a right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded.

According to Section 14 of the Stamp duty Act, an instrument executed in Uganda that is chargeable with duty must be stamped within forty-five days. For an instrument executed out of Uganda, it shall be stamped within thirty days of being received in Uganda.

Implication

The notice states that an instrument chargeable with duty shall not be admitted in any judicial proceedings as evidence unless stamp duty is paid and the instrument is duly stamped. This is provided for under Section 32 of the Act.

This also implies that such instruments are enforceable by law if they satisfy the provisions under the Stamp duty Act 2014. A mere signing of the agreements of property or memorandum of Agreement is not valid before the law.

The Schedule 2 of the Stamp duty Act provides that the duty payable is UGX 15,000/ for each agreement or memorandum of agreement and 1.5% of total value of land transferred.

Penalty

The publication is crowned with a warning that it is an offence to execute an instrument without payment of stamp duty.

Section 52 of the Act provides that when duty becomes due and payable, it’s a debt to the Government of Uganda.Section 57 provides that failure to pay stamp duty on Agreements attracts a penalty and the person is liable to a fine or imprisonment not exceeding six months or both

Take away

  • To note is that the provision relating to duty on agreements and memorandum of agreements has been in place for a long time however, there has been minimal compliance by the pubic to the provisions of the Act.
  • We can only speculate that the notice is an attempt to revamp self-assessment of the tax so as to improve tax collections.
  • It is also noteworthy that only 2 instruments have been signed out for publication so far.
  • Agreements and Memorandum of agreements could have been considered to have the highest tax exposure (apart from instruments executed by financial institutions which are quite well regulated).
  • While there is such a long list of such instruments in the Schedule 2, it is very likely that other publications shall follow and that there may be heightened enforcement in the near future.

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