ENSafrica ENSight | 8 August 2017

Rent must now be charged in Uganda shillings

by Phillip Karugaba and Sheila Pacuto
Section 5 of the Income Tax Act (Cap. 340) (the “ITA”) has been amended to, among others, include a requirement that all rental agreements be executed and effected in Uganda shillings.

Below, we summarise this new legal requirement.

What is the meaning of the new requirement?

All rental agreements executed after the law comes into force must express the rent in Uganda shillings and must be payable in Uganda shillings.

Is the law in force?

Yes, the law took effect on 1 July 2017.

To whom does it apply? 

The law applies to all rental arrangements, whether residential, commercial or for industrial use. The current market practice is that for larger and higher-end real estate, rent is expressed in United States dollars (“USD”).

This law is expected to affect developers who usually finance higher-end real estate in USD. The law will now force developers to run a currency risk, which may be a cause of concern to both developers and their lenders.

Does it affect existing leases or tenancy agreements?

The law is silent on its effect on existing leases and tenancies. In our view, all existing leases and tenancy agreements entered into prior to the amendment, where rent is denominated in USD, will continue until expiry of their term. The obligation created by the amendment is to “execute” and “effect” rental arrangements in Uganda shillings. It therefore follows that this should not affect existing leases and tenancies that were executed prior to the date the amendment came into force. The law will apply to leases and tenancies executed on and after 1 July 2017.

What is the consequence of non-compliance?

There are no stated sanctions for non-compliance. However, executing a lease or tenancy agreement contrary to the law will render such an agreement illegal, making it unenforceable in a court of law.

For more information, please contact: 


Phillip Karugaba

head of ENSafrica Advocates | Uganda
cell: +256 772 785 332

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Sheila Pacuto

ENSafrica Advocates | Uganda | senior associate
cell: +256 784 116 125

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No information provided herein may in any way be construed as legal advice from ENSafrica and/or any of its personnel. Professional advice must be sought from ENSafrica before any action is taken based on the information provided herein, and consent must be obtained from ENSafrica before the information provided herein is reproduced in any way. ENSafrica disclaims any responsibility for positions taken without due consultation and/or information reproduced without due consent, and no person shall have any claim of any nature whatsoever arising out of, or in connection with, the information provided herein against ENSafrica and/or any of its personnel. Any values, such as currency (and their indicators), and/or dates provided herein are indicative and for information purposes only, and ENSafrica does not warrant the correctness, completeness or accuracy of the information provided herein in any way.



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