By Muhimbise George
The Uganda Revenue Authority’s (URA) recent announcement that Ugandans will now be required to pay a stamp duty tax of UGX 15,000 on all agreements they enter into attracted mixed reactions, with a section of the population criticizing the move.
First things first, this isn’t a new tax that the URA has created. This tax has been in existence in accordance with the Stamp Duty Act, only that URA hasn’t been collecting it fully due to limited resources and capacity as well as non compliance by Ugandans. The URA’s recent move is simply an effort to enforce an existing law and broaden its revenue collection.
I pity Ugandans who often complain about the taxes we pay. For example, Uganda’s tax-to-GDP ratio has been stuck at around 13% for years. To put that into perspective, countries we often admire have much higher ratios. For instance, Denmark, Norway, France, Belgium etc boasts a tax-to-GDP ratio of over 40%, and Canada sits at approximately 34.8%. These nations enjoy excellent public services, largely because their citizens understand the importance of paying taxes. They know that contributing to the national treasury translates into better services for everyone.
We Ugandans are excellent at demanding services—better roads, quality healthcare, improved education—you name it. However, when it comes to paying taxes, many of us suddenly develop cold feet. It’s like wanting to harvest matoke without planting the banana tree. Most Ugandans only pay taxes that are automatically deducted, such as VAT and PAYE.
Remember the days of the graduated tax? Many Ugandans would rather camp in the bush than pay it, even though it was a modest amount. Fast forward to today, and there’s resistance to systems like the Electronic Fiscal Receipting and Invoicing System (EFRIS). This reluctance isn’t due to a lack of funds but a mindset issue. It’s ironic that someone would willingly pay an LC1 Chairperson UGX 100,000 to sign land purchase agreement but will find it hard to pay a UGX 15,000 stamp duty tax for the same agreement.
Why Pay the Stamp Duty Tax?
An agreement is a legal document that can serve multiple purposes. For instance, it can be used as collateral to secure a bank loan. Paying UGX 15,000 to legalize a document that could help you obtain a loan is a wise investment.
Agreements confer ownership—be it a car, land, or a house. If you’ve purchased a piece of land for UGX 10 or 20 million, paying UGX 15,000 to legalize the sale agreement is a small price to ensure your ownership is recognized.
When disputes arise, courts or other authorities rely on these agreements for arbitration. The government uses its resources to resolve these disputes, so it’s only fair that we contribute through taxes to support this process.
In our culture, it’s customary to pay an LC1 Chairperson to sign and stamp an agreement, often a significant amount depending on the transaction’s value. We also offer tokens of appreciation to witnesses. These payments aren’t legally mandated, yet we make them willingly. So, why do we hesitate to pay a lawful UGX 15,000 stamp duty tax?
I urge all Ugandans to embrace the voluntary payment of taxes. By doing so, we empower our government to provide the goods and services we so eagerly demand. Remember, you can’t expect to enjoy a bountiful harvest if you’re unwilling to sow the seeds.
In conclusion, paying the stamp duty tax on all agreements is a small step for each individual but a giant leap for Uganda’s development. Let’s change our mindset and recognize that our contributions, no matter how small, play a crucial role in building the nation we desire.
Muhimbise George, policy analyst
