Business 8 August 2026 Daily Monitor (Uganda)
Uganda's First Property Fund Stalled by Small Tax Hurdle
A single line in Uganda's tax law, imposing a 1.5% stamp duty on property transfers into Real Estate Investment Trusts (REITs), is preventing the country's first property fund from launching. This tax, levied before any revenue is generated, deters developers from utilizing the REIT structure designed to unlock cheaper, long-term financing. Source: https://www.monitor.co.ug/uganda/magazines/people-power/how-a-small-tax-is-blocking-uganda-s-first-property-fund-5551586
Uganda’s ambitious plan to launch its first Real Estate Investment Trust (REIT) is currently stalled due to a seemingly minor tax issue. Despite establishing a regulatory framework in 2017, the nation’s property developers are hesitant to adopt the REIT model, which aims to pool investments for property development and management.
The core of the problem lies in Uganda’s stamp duty, set at approximately 1.5% of a property’s value. This tax is applied when a property is legally transferred into a REIT trust, a necessary step before units can be sold to investors. Crucially, this tax is levied even though no actual cash has changed hands yet, forcing developers to pay out of pocket for a deal that hasn’t yet generated any income.
Tax experts like Cephas Birungyi highlight that this upfront tax burden acts as a significant deterrent. Unlike in neighboring Kenya, where transfers into REITs are tax-exempt, Uganda’s approach creates a financial barrier. This contrasts with the intended purpose of REITs, which is to facilitate easier and more affordable long-term financing by democratizing property ownership.
While Uganda’s Capital Markets Authority (CMA) is reportedly in discussions with the Uganda Revenue Authority (URA) to find a resolution, the URA is reluctant to forgo the immediate revenue from stamp duty. Suggestions for a solution include a narrowly defined tax exemption specifically for REITs that meet certain conditions, such as distributing a high percentage of income to investors, similar to successful models in South Africa and the US. Limiting the exemption by duration or deal volume could also address the URA’s concerns about potential long-term revenue loss.
The situation is particularly frustrating as Uganda already has precedents for waiving stamp duty on other strategic investments, demonstrating the government’s capacity to tailor tax policies to encourage desired economic activities. The success of REITs could unlock significant capital for Uganda’s burgeoning real estate sector, but resolving this initial tax hurdle is essential for their inception.