As dusk settles over Kampala, its skyline glitters with new towers and estates, some unfinished, many unoccupied, and most untaxed.
They stand as monuments to ambition and inequality, symbols of a nation where wealth is visible but revenue is invisible.
From Kololo’s mansions to the glittering lakeside estates in Munyonyo, Uganda’s real estate sector is booming.
Cranes tower over Kampala, gated communities expand across Wakiso, and rural towns are dotted with new rentals and shopping complexes.
But, behind this frenzy is a revenue blind spot, referenced by the World Bank in its 25th Uganda Economic Update.
The report, published last week, details the property and real estate boom, but reveals a glaring mismatch in which property-related taxes (land rates, rental income tax, and stamp duties) contribute less than 0.4 percent of GDP.
While the elite continue to invest heavily in land and property, government captures very little of this growing wealth, with the World Bank describing real estate as ‘the fastest-growing store of private wealth and one of the least taxed’.
The real estate boom
Uganda’s wealth distribution is tilting sharply. The World Bank shows that the top 10 percent of Ugandans now control nearly 40 percent of the national income, while the bottom 40 percent share just 13 percent.
Much of this wealth is concentrated in urban property, which has become the investment of choice for high-net-worth individuals, politicians, and corporates.
‘Real estate is now a parallel economy. It absorbs much of Uganda’s savings, foreign remittances, and undeclared income,’ the World Bank notes in the 25th Uganda Economic Update.
This, as a result, the report notes, has created a price bubble, in which land prices have risen by more than 400 percent in the last decade in Greater Kampala.
Low tax returns
The real estate sector contributes barely 2 percent of all domestic tax collections, the World Bank notes, helping little to lift Uganda’s tax-to-GDP ratio, which has stagnated at about 13.2 percent in the last three years, far below the sub-Saharan average and government’s own target of 18 percent.
The World Bank attributes this difficulty to taxing the real estate to money lost through trade misinvoicing, smuggling, and corruption.
Uganda is estimated to lose between $550m and $750m annually to such outflows, much of which re-enters the economy disguised as property investment.
‘Real estate has become a preferred destination for recycled wealth. It offers anonymity, asset appreciation, and weak enforcement,’ the World Bank notes
This, the report says, distorts the housing market through inflated land prices and deepening inequality.
Thus, while a small elite accumulates luxury assets, millions of Ugandans face rising rent, poor housing, and limited access to land.
World Bank’s data shows Uganda’s Gini coefficient, which measures inequality, has risen to 0.44, up from 0.42 in 2020, a clear sign of widening inequality.
The bottom 60 percent of Ugandans, mostly in rural areas, now earn less than Shs10,000 per day, while the urban middle class faces stagnant wages.
Yet property and wealth remain untaxed, leaving Uganda’s fiscal burden to salaried workers through pay-as-you-earn and consumption taxes.
‘Uganda’s tax system is regressive. High-income individuals benefit most from tax exemptions and weak enforcement,’ the report says.
The politics of taxing real estate
Efforts to tax high-end property have repeatedly stalled due to political resistance.
But URA, with technical support from the World Bank and IMF, has revived plans for a high-net-worth individual compliance unit, tasked with mapping luxury property, tracking asset transfers, and linking land ownership to income declarations.
However, the unit remains weak, according to the World Bank, due to resource limitations and access to data.
For instance, the Update notes that because of limited resources, the unit only audited 44 high-net-worth individuals between 2012 and 2021, despite managing a register of over 1,200 individuals.
Therefore, the World Bank says there is need to improve property and wealth tax administration, which could add 2.5-3.5 percent of GDP to domestic revenues or roughly Shs4 trillion annually.
‘If Uganda wants to finance its growth without debt, it must tax its wealth. And that wealth is sitting in land, not in the banks,’ the report says.