Stamp Duty

The process of determining stamp duty on the transfer of immovable property.

Stamp Duty in Uganda: A Comprehensive Overview

Stamp duty in Uganda is a tax levied on legal documents to make them legally enforceable and admissible in court. It is governed primarily by the Stamp Duty Act, 2014, which consolidated and simplified previous laws, aligning the taxation of documents with modern legal and economic trends.

1. What is Stamp Duty?

Stamp duty is a form of tax imposed on documents that serve as evidence of financial transactions, such as agreements, contracts, land transfers, leases, mortgages, and share transfers. The tax signifies the legal recognition of these documents and is payable whether or not the document is physically stamped.

2. Legal Framework

The Uganda Revenue Authority (URA) is mandated to collect stamp duty under the Stamp Duty Act. This law outlines the instruments subject to duty, applicable rates, exemptions, and procedures. It also empowers URA to enforce compliance and penalize defaulters.

3. Instruments Liable for Stamp Duty

Common documents subject to stamp duty include:

• Land sale agreements and title transfers
• Lease agreements
• Powers of attorney
• Share transfer forms
• Company incorporation documents
• Loan agreements and mortgages
• Insurance policies

Each of these instruments attracts a specified fee or percentage based on the value of the transaction or document.

4. Stamp Duty Rates

Stamp duty rates in Uganda vary depending on the nature of the document. For example:

• Land transfer: 1.5% of the property’s value
• Lease agreements: 1% of the annual rent
• Powers of attorney: UGX 15,000
• Share transfer: 1.5% of the value of shares
• Company incorporation: UGX 20,000–25,000 depending on the capital

A full schedule of rates is available on the URA website or at local tax offices.

5. How to Pay Stamp Duty

Payment of stamp duty is now done electronically through the URA e-Stamp system:

1. Log in to the URA portal
2. Generate a Payment Registration Number (PRN)
3. Pay via bank or mobile money using the PRN
4. Submit proof of payment to URA or the respective registry for document processing

The stamped document is then physically or digitally marked to show that duty has been paid.

6. Exemptions from Stamp Duty

Certain instruments are exempted from stamp duty under the law. Examples include:

• Transfers of property between spouses or close family (in specific cases)
• Instruments executed by or on behalf of the government
• Transfers involving charitable institutions or NGOs (if approved)

Exemptions must be applied for with supporting documentation and URA’s prior approval.

7. Penalties for Non-Compliance

Failure to pay stamp duty can result in:

• Penalty of double the amount of unpaid duty
• Delay or invalidation of document processing
• Legal disputes due to non-admissibility in court

Timely compliance is therefore crucial for both legal enforceability and financial accuracy.

8. Importance of Stamp Duty

Stamp duty plays a critical role in:

• Supporting public revenue generation
• Providing legal validity to documents
• Preventing fraud and ensuring transparency in transactions

It is an essential requirement for land transactions, corporate operations, and contractual agreements in Uganda.