Assessing the impact of rental income tax compliance and enforcement measures on rental pricing. A case study of Commercial Properties in Ntinda, Kampala

Abstract

This study assesses the impact of rental income tax compliance and enforcement measures on rental pricing in commercial properties within Ntinda, Kampala. In response to Uganda Revenue Authority’s efforts to boost tax revenue, new tax compliance measures were introduced in 2018 and reinforced in 2021, leading to increased operational costs for property owners. These costs have influenced rent pricing decisions, potentially affecting the affordability and sustainability of commercial spaces, particularly for small and medium enterprises. The research adopted a qualitative approach, with qualitative insights obtained from semistructured interviews and document reviews. A sample of 45 property owners and managers was selected using purposive and snowball sampling techniques. The study explored property owners’ knowledge, attitudes, and practices (KAP) regarding tax compliance, identified existing compliance gaps, and examined the relationship between KAP factors and actual compliance behavior. Findings reveal a high level of awareness and generally positive attitudes toward tax compliance; however, several challenges persist, including high tax rates, procedural complexities, and delays in tenant payments. These challenges have led many landlords to raise rental prices to offset tax-related expenses. The study concludes that while compliance is improving, the current enforcement measures may indirectly increase rent burdens on tenants and strain business operations. It recommends simplifying tax procedures, reducing rates, and enhancing public awareness to foster greater compliance without undermining the commercial rental market’s viability.