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6. Appropriate Regulation – Weak
6.1 Fair Tax Regime
6.2 Professional Services
6.3 Capital Markets
In-Country Assessment Information

6. Appropriate Regulation – Weak

Goal – A comprehensive regulatory regime that is transparent, efficient, simple in its implementation and that leads to accurate reporting of property values and prudent protection from market risks

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6.1 Fair Tax Regime

 

Core Question: Do market participants feel the overall tax rate is fair and participate in formal transactions? Yes – Strong, reforms have taken place over the last decade and some incentives are in place for industrial buildings and hotels.

 

Transfer Tax

6.1.1   What is the total property transfer tax including all duties and payments?  Very Strong –  1.9%

 

Overall Tax

6.1.2   What is the overall tax rate on entrepreneurs?  37.1% – Ranking –  93rd out of  185 Strong – Trend  ↓Source: Doing Business 2013– Paying Taxes & Registering Property, World Bank
www.doingbusiness.org/ExploreEconomies/?economyid=193

 

Divestment

Survey Question

SQ 28  What is the tax on profits for foreign investors when divesting property? 15% tax on rental income, foreign corporate income tax is 30%, capital gains tax is 26.8%.

Source: Uganda Revenue Authority     http://www.ura.go.ug/

 

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6.2 Professional Services

 

Core Question: Are the professional services necessary for efficient and transparent property markets available and appropriately regulated and supervised? No – Very Weak, the market is small relative to the housing needs.

 

Asset Valuers

Survey Questions

SQ 29  Are property valuers licensed and/or certified by the government?  Yes – Weak – registration is limited land surveyors and government valuers.

Source: Ministry of Lands, Housing & Urban Development – www.mlhud.go.ug/ 

Civil Society Resource: Institution of Surveyors of Uganda

 

SQ 30   How effective are mechanisms in place to discipline valuers who engage in misconduct? Very Weak – Resources and coordination between government levels and departments called for in new Land Use Policy.

 

Brokers & Agents

Survey Questions

SQ 31  Are real estate brokers and agents licensed and/or certified by the government? No – Very Weak – estate agents were at one time registered by the Ministry.

 

SQ 32  How effective are mechanisms in place to discipline brokers or agents who engage in misconduct?  Very Weak – no Code of Conduct currently exists, but one has been drafted by the government.

Source: IRPF Assessment visit August 2008.

 

Mortgage Professionals

Survey Questions

SQ 33  Are mortgage professionals licensed and/or certified by the government? No – The Ministry of Finance Planning and Economic Development needs to put in place mechanisms that will standardize the procedures, practices and documentation of mortgage lending operations – Very Weak

  

SQ 34  How effective are mechanisms in place to discipline mortgage professionals who engage in misconduct? None in place – Very Weak

Source: Access to Housing Finance in Africa: Uganda, FinMark Trust – http://www.finmark.org.za/publication/access-to-housing-finance-in-africa-exploring-the-issues-in-uganda/

 

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6.3 Capital Markets

 

Core Question:  Are capital markets well-regulated and diversified enough to provide financial resources to private-sector entrepreneurs and innovators? No – Weak – there is a general lack of understanding of capital markets, poor governance and financial reporting mechanisms.

 

Capital Flows

6.3.1   What are the business impacts of rules on Foreign Direct Investment? Very Strong – Ranking 31st  out of 144; Score 5 out of 7

 

Security Exchanges

6.3.2   Is the regulation of securities exchanges transparent, effective and free of influence from government and industry? No – Weak, Ranking 72nd out of 144 Score  4.2 out of 7

Source: The Global Competitiveness Report  2012-2013, World Economic Forum

http://www.weforum.org/issues/global-competitiveness

 

Securitization

6.3.3   What is the depth of asset-backed securities, mortgage-backed securities, high-yield bonds and highly leveraged loans? Weak – capital markets are very small with low turnover.

Source: Access to Housing Finance in Africa: Uganda, FinMark Trust –  http://www.finmark.org.za/publication/access-to-housing-finance-in-africa-exploring-the-issues-in-uganda/

 

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In-Country Assessment Information (as of August 2008)


Taxation

 

FQ 21. What is the overall taxation system in regards to property?

In addition to the 1.9% transfer tax, yearly property taxes are levied by the local governments. The tax rates are determined by the local authorities but a maximum of 2% is prescribed by law.

 

Brokerage

FQ 22. What is the number of practitioners in the country including full-time brokers/agents with formal training and part-time, informal brokers?

Reliable sources indicate between 120 and 150 formal practitioners and 60 to 90 informal brokers.

 

FQ 23. What is the number and average size of brokerage companies?

There are approximately 30 firms in Uganda. Outside of the top 4, the average number of practitioners per company is 2- 3. The top companies are multidiscipline and have personnel numbering in the 40-50 range primarily in property management.

 

FQ 24. Are there brokers associations active in the market? What number and what percentage of practitioners belong?

There are two associations. Uganda Estate and Property Managers Association (UEPMA) was founded in 2004 and has fundamentally become defunct. The Association of Real Estate Agencies (AREA) was formed in 2008 and very enthusiastic and desirous to grow.

 

FQ 25.  What training programs are available to enhance productivity?

There are internal training programs in the large brokerage firms.

 

FQ 26. Is there a Code of Ethics or standards that practitioners follow? Is the Code enforced?

No, although one has been drafted by the government.

 

FQ 27. Do civil society organizations exist to support the development of mortgage professionals?

No – market not yet developed enough to support an association.

Source: IRPF Assessment August 2008

 

 

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