Rent Must Now Be Charged In Uganda Shillings

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...