Mention land and you will have everyone's attention. Land is a very important asset and you would like to secure the land you have bought with your hard-earned money.
Usually, a buyer and seller will sign a sale agreement before money exchanges hands. However, like John would later find out, having paid the buyer alone didn't guarantee him ownership of the land. He is one of the unfortunate land buyers who are swindled after buying a piece of land under contention.
In John's case, the land he picked interest in was inherited and not all the brothers had agreed to sell it. John's sale agreement without being embossed (payment of stamp duty) could not save him from the harsh reality he faced when his case came for mention in court.
The dubious 'brother' who 'sold' him the land did not have the right to sell it on his own. The matter would have been different if John had made the sale agreement legal by having it embossed; stamp-authenticated by Uganda Revenue Authority.
This process constitutes payment of stamp duty. In simple terms, stamp duty is a levy, charge or duty on value documents to make them legitimate in the courts of law. A value document is usually one that represents the interest of two or more parties.
John should have paid duty on the sale agreement within thirty days of signing it. Let's say he bought the land at the beginning of October; by the 30th of the same month, he should have made the payment.
Some of the examples of instruments and value documents that attract Stamp Duty include, but are not limited to: agreement or memorandum of agreement; hire purchase agreement; caveat; cancellation; release; solemn declaration; affidavit; mortgaged deed; debenture; lease agreement; letter of credit; promissory note; and divorce deed.
In October 2012, URA introduced e-stamping. This is simply a change in the process of assessing, that is, knowing what you are supposed to pay and for what documentation (instrument) and actually paying stamp duty.
It is simply a computerized process of applying for and paying the duty. The old method would have John first bring his sale agreement to the URA Diamond Trust bank office and fill some paperwork detailing the reason for paying stamp duty.
He would then have to line up at the Diamond Trust bank with a payment slip to pay Shs 5,000, after which he would submit the agreement plus proof of payment to the URA office. The responsibile centre would then forward John's documents to the ministry of Finance, Planning and Economic Development to have them stamped (that is where the machine was).
John would then have to check with URA after two working days to receive his stamped sale agreement. With the new automated system however, John simply has to log on to the URA website http://ura.go.ug and register his payment.
For guidelines on how to do this, follow the link 'How to use e-services' on the URA home page. John now has many bank payment options, not only Diamond Trust bank as was formerly the case.
He can then go to any URA Domestic taxes office to submit his documents, payment slip, and the sale agreement. The e-stamping is done electronically. The system has authentic measures in place to prevent forgeries. John would leave with his authentic sale agreement the same day.
Below is part explanation on how stamp duty is calculated. There are two types of rates:
i) Those that do not change with the amount in the instrument (fixed rate); e.g Shs 5,000, Shs 10,000, Shs 50,000, and Shs 100,000. Say, policy of insurance or caveat is fixed at Shs 5,000.
ii) Those that are calculated using percentage rate (ad valorem); e.g 1%, 0.5% 0.05% of the total amount. Say, transfer of land is 1% on government valuers' figure. Hence e.g. 45,000,000x1% = 450,000 while mortgage deed is at 0.5% of valu: e.g.200,000,000x0.5%= 1,000,000.
Don't let your land end up like John's, pay the stamp duty to make your sale agreement valid in the courts of law should the need to go to court arise.
The writer works in the media section of the Commissioner General's office.