Rental income tax compliance among high net worth individuals in Nakawa Division, Kampala City

Abstract

The purpose of the study was to assess rental tax compliance among high net worth individuals in Nakawa division. The study was guided by four specific objectives; to assess the extent of rental tax compliance, to assess the knowledge of rental tax, to assess the perception of rental tax compliance and to establish the challenges associated with rental tax compliance. This study adopted descriptive survey research design as it enabled the collection of data to answer the research questions. The study population was 97 respondents who were high net worth individuals, drawn from Mutungo, Mbuya, Luzira and Butabika. A questionnaire was used to collect primary data and had both open and close-ended questions; an interview guide was administered too. The collected data was edited for completeness and consistency. Descriptive analysis such as percentage and frequencies, were used to analyze quantitative data. In conclusion, based on the findings, the study established that the level of rental income tax compliance is slightly above average, majorly as a result of inadequate knowledge, and a perception that the tax revenue collected by the government is always spent wastefully on politicians and unnecessary political activities, leaving little to spend on social services that benefit the bigger population. From the results it was concluded that tax compliance was affected by various factors which include a feeling that they need to be honest in their rental tax declarations, the feeling that its immoral to overstate tax deductions as well as a feeling that every taxpayer pays their fair share of rental tax under the current rental tax system. The findings on the perception of rental tax compliance among high net worth individuals indicate that most of the respondents said that a lot of government revenue is wasted on politicians, and this demotivates them from paying taxes. However, on the challenges they revealed that inaccurate registry data means that some individuals are notified with irrelevant or inaccurate information, many high net worth individuals believe their properties to be overvalued. Additionally, poor service delivery lowers tax morale leading to non-compliance because taxpayers believe there is no reciprocity for paying their taxes. Further, the management of the URA should improve on tax payer education efforts to ensure that the right information is disseminated to all rental tax payers.