Lake Victoria Hotel Limited v Uganda Revenue Authority
Tax Appeals Tribunal, Application No. 300 of 2024. July to December 2025. Coram: Ms. Crystal Kabajwara; Mrs. Stella Nyapendi Chombo; Ms. Grace Safi.
Rental Income vis-à-vis Business Income · Rental Income from Leased Properties
A hotel company leased its whole hotel to an operator for USD 850,000 a year. Rent, or business income?
The situation
A hotel company leased its hotel to an international operator from December 2020 at USD 850,000 a year. It was assessed on undeclared rental income for 2021 and 2022; after objection the tax kept was UGX 118,460,942. The company said it had transferred the hotel business, so the income was business income.
How it was resolved
The Tribunal held it was rent. The agreement's main purpose was the right to use and occupy the buildings; obligations to keep a four-star standard were ordinary lease conditions; and a fixed annual sum, rather than a share of the hotel's earnings, showed a letting of property, not of a business.
What a practitioner takes from it
A fixed payment for the use of premises points to rent, whatever else the agreement says.
Rental income is ring-fenced: it is taxed apart from business income.