Using spatial methods to boost rental taxes in Kampala

Michael Masembe

ATRN working paper 21

September 2017

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ISBN (Online): ISBN (Online): 978-0-9584218-0-5 2017

2
 Using spatial methods to boost rental taxes in Kampala

Michael Masembe

Abstract

This paper suggests a spatial method of checking rental tax compliance in Kampala. It tackles the
informal ownership of property which has been frustrating the identification and monitoring of
property owners who are a potential source of income tax. The researcher conducted a Uganda
Revenue Authority (URA) staff and system investigation on the effectiveness of current
compliance monitoring methods. The findings show that the URA needs a more effective method
of monitoring rental tax compliance. This calls for a review of the rental tax registration process
and the administrative policies. The review would make sure that whoever is taxable, remits the
taxes due and continues to do so without fail; as long as s\he lingers above the taxable threshold.
In effect, this study presents a spatial tool that identifies rental tax non-compliance in Kampala.
The tool design and implementation satisfied its users during system testing. The paper concludes
that spatial methods can support URA’s goal to tap into the underperforming rental taxes.

Keywords: Geographic Information System (GIS), spatial, rental tax, compliance

JEL Codes: H20 H26

3
List of Acronyms

DVARs Data Value Added Resellers

GIS Geographic Information System

GoU Government of Uganda

GPS Global Positioning System

KCCA Kampala Capital City Authority

PRN Payment Registration Number

QGIS Quantum Geographical Information System

URA Uganda Revenue Authority

4
INTRODUCTION

This study rooted cause in the low tax compliance levels in Uganda (AfDB Group, 2010). This
partly results from the tax agency failing to trail taxpayers, yet, if done, it can salvage a huge
revenue proportion from evasion (Youngu, et al., 2011). At present, the tax collections are low
despite the booming property business in the country. And even where tax collections doubled
from 2004 (1.3trillion) to 2012 (6.6 trillion), a gap remained and remains visible on taxes related
to property. Most of these properties falling under rental tax1 are in the Ugandan Capital, Kampala.
Kampala is populous with about 1.6 million residents, settled on its 86.7% land cover of its
369sq (32km) radius (Mungyereza, 2015). According to (Lwasa, 2005), within this population,
tax evasion remains commonplace as property owners argue that they get less from the
government. So, the URA must seek efficient means of collecting the tax from these rising
unwilling settlement numbers.

Hence, this paper proposed spatial2 methods in the existing tax information systems to enhance
taxpayer compliance checks. This is at the backdrop of the URA having used similar information
technology and modern management techniques enhance tax compliance in the past (AfDB Group,
2010). The tax agency must harvest from these past massive investments in IT systems e.g. through,
data matching, enhancing compliance management capabilities and using third-party data
(Musinguzi, et al., 2012). And to meet this, the Germany government is supporting the URA to put
up a data warehouse (Blume & Bott, 2015). This way the URA would efficiently check Tax
Assessments, Payments, and Arrears (Okuja, 2015).

So, this paper explores how the spatial methods can help to sort this Kampala problem as done for
other urban planning management issues. In (Manasi, 2010), Bangalore tackled a similar problem
using a Geographical Information System3 (GIS) to expand the city tax register by
150,000(2009<2011). However, (Glassey & Sandoz, 2009) warn that this may only increase
numbers on the register but not the collections. No doubt, in Bangalore the measure only increased

1
In Sec.5 of the Income Tax Act, URA charges tax for each year of income on any person who has rental income
(Okuja, 2015).
2
Data containing position values (Weir, et al., 2001).
3
A computerised system that facilitates data entry, data analysis and data presentation especially in cases when
dealing with georeferenced data (Weir, et al., 2001)
5
the defaulters issued with reminder notices by a 300,000 double margin, bringing in only a paltry
0.1% (Manasi, 2010). URA has had this problem before (Kangave, et al., 2016) and must watch
the value of clients added to its register to avoid the Bangalore flop. Therefore, the tax agency
needs a cheap spatial tool (Youngu, et al., 2011) that pools data in one spatial database. This can
show the site and non-spatial attributes4 of each property for tax compliance checks.

The rest of this section presents the problem statement, aim and study scope. The second section
presents the review of literature and in the third section the methods used for the study. Section
four presents the findings and the fifth section discusses the results. The sixth section summarizes
and concludes this study.

Problem Statement

Uganda’s annual tax contribution from immovable property (including rental tax) has been low
for the past decade. The year 2005 registered the lowest performance at 0.194% and the highest
was 0.233% in 2007 but to date, the trend has not improved (Male, 2010; Mungyereza, 2015). This
poor performance partly results from inadequate property information and the low 1:986 staff to
taxpayer ratio (URA Staff Interviews: Giddings, 2009). Mukwaya (2004), had earlier attributed
the low collections to the poor land tenure systems and the vague land policy in Kampala. To this,
he added the poor urban planning regulations, their weak enforcement, lax land registration
systems and poor land taxation regimes. So, the few tax officers find difficulty in assessing the
actual amount of tax due from property owners; who again cannot be found for issuance with tax
assessments. This is because the officers lack the information to guide them to the properties that
appear on the register. The lack of information results from the URA tax registration forms5 (DT-
1001 and DT-1002) which do not capture the spatial details needed to find a property. Also, the
rental project (Kangave, et al., 2016) that URA set-up to improve rental taxes6 has not considered
using spatial methods. To (Franzsen, 2000), this plus the inefficient land information systems, the

4
A data item associated with a record in a database (Goodchild, et al., 2015)
5
See: http://ura.go.ug
6
See: TREP (2015). Taxpayers Register Expansion Programme - Business Case (2015-17) Version 1(unpublished)
6
poor coordination between government valuation agencies and rating authorities; are the
hindrances to proper rental tax administration in Uganda.

Aim

To develop a spatial analysis method of administering rental tax in Kampala.

Scope

The study focused on using spatial methods to manage rental tax compliance in Kampala by URA.
The respondents were tax administrators in URA. The study used Kampala because it has most
registered taxable properties and contributes the highest rental tax.

REVIEW OF LITERATURE

Introduction

This section reviews the literature on GIS monitoring systems in taxation to check spatial and non-
spatial patterns. It probes the use of spatial methods to the study problem.

Using Spatial Analysis to Check Tax Compliance

Governments have the responsibility to update inventory information on taxable property

(Youngu, et al., 2011). It is, therefore, up to agencies e.g. URA and surveyors at the Ministry of
Lands Housing and Urban Development (MLHUD) to create and keep tax maps. During the
process, cartographers must give each property a unique parcel identifier on the tax map such that
the tax agency does not omit them from the tax rolls. This way, the tax agency cannot tax the
properties more than once which is one of the major problems likely to result. In such an
arrangement, the tax officer can find taxable units and assess them taxes (Youngu, et al., 2011).
To do this, the tax agency must link this information to a GIS and an accounting system that
produces bills, monitors receipts, and other compliance actions.

7
Lessons on Spatial Tax Compliance Monitoring in Africa

Nigeria

Earlier GIS initiatives in Lagos Nigeria were a flop and URA ought to learn from that. This
resulted from the haphazard and discriminative implementation of the 1989 property tax reforms
which triggered the failure of spatial tools in Lagos. Therefore, (Babawale & Nubi, 2001), caution
cities like Kampala to adopt spatial maps as mere compliance monitoring tools than tax
assessment tools. And even then, URA must consult and educate the major stakeholder, the user.
Having learnt these lessons, Nigeria never repeated these mistakes elsewhere.

And to safeguard against such problems, Nigeria merged its two spatial data handling agencies to
form the National Geospatial Data Infrastructure (NGDI). This provided a basis for spatial data
discovery, evaluation, and application for users and providers within all levels of government, the
commercial sector, the non-profit sector and academia. In this instance, the implementor must have
a unique property identification system and close collaboration between the municipal councils
and the land boards (Youngu, et al., 2011). For Kampala, the URA, Kampala Capital City
Authority (KCCA) and Kampala District Land Board must together. In Abuja, this process helped
to cut errors and double taxation of properties. This resulted from the Abuja revenue body linking
its GIS to an accounting system to produce bills, check receipts and find areas that need a follow-
up.

Lesotho and Somalia

A clear land tenure system simplified the property valuation and taxation process in Maseru,
Lesotho (Youngu, et al., 2011). The surveyor general developed a mapping system that helped to
find any parcels. To (Nieminen, 2002), within such cities where large irregular unplanned areas
exist, valuation and identification problems exist. This problem exists in Kampala and government
must tackle the multiple land ownership systems that shroud the city. Without regard to the
possible problems, though, the Horn of Africa offers evidence of benefits that Uganda can get. In
2004, the United Nations Development Program (UNDP) set up a GIS at Hargeisa Municipality.
The GIS increased the annual property based tax revenues collected in Somaliland by 248 percent
from USD 169,062 in 2005 to USD 588,754 in 2008 (Youngu, et al., 2011).
8
GIS Rental Tax Monitoring in the Developed World

United States of America (USA)

In the USA, the Illinois Department of Revenue (DOR) geocoded over 250,000 tax filers, overlay
taxing districts and developed applications using GIS (Tim, et al., 2012). At the end, the state had
developed a seamless state-wide coverage of all 6,600+ taxing districts. The Illinois DOR had thus
created a common thread throughout its geographic data linking tax districts, property tax data,
legislative districts, municipal boundaries, demographic data etc. on the face of the earth (Tim, et
al., 2012). It’s possible that URA can gain from such spatial capabilities to boost data analysis and
cut the cost of checking compliance. The DOR has embraced this through its goal "to develop and
maintain a Geographic Information System (GIS) that would enable the Department to give
accurate and expeditious statistical information regarding income tax, and property tax as it
relates to a geographical area or location”. A similarly determined resolve at the URA can boost
the tax agency’s Domestic Revenue Mobilization efforts.

GIS Tax Monitoring in Denmark

Denmark has successfully applied spatial analysis in property identification, valuation, and
assessment of tax using value maps. This has been against the limitations of traditional value maps.
Now, users can scale contemporary spatial tools like QGIS to offer excellent analytical
functionalities, versatility, cheapness and ease of update (Wyatt, 1996). He also alludes to the
necessity to spatially represent all property values on maps because this forms the basis of any
future tax assessments on such property. Therefore, it is imperative for URA to get geographical
data about all properties that it intends to assess for taxes.

Building Spatial Tools from Current Data and Software

URA can source tax information from legal transactions e.g. tenant payments. However, (Thrall,
1979; Thrall, 1998), warn that such data is expensive, difficult to get, not in usable formats. In the
developed world, these impediments to public access to information on real estate transactions
have created a market for Data Value-Added Resellers (DVARs). The DVARs get property data
and restructure it into an easy-to-read format, such as the popular DBF file format that most GIS
9
and spreadsheet software can read.

DVARs offer more value by adding latitude and longitude coordinates to the data records like
property assessment files. The officers can then use this as spatial data in a GIS software program.
In so doing, government bodies like URA that may not have the requisite property data may opt to
buy it from these trusted third-party sources. This product may include a software program specific
to the data which allows the user to search and query by data field, create subsets of data, and
generate reports. Without desktop GIS software and DVAR products, the display and analysis of
information from the tax assessment records can be time-consuming, costly, and possibly not
possible at all (Thrall, 1979; Thrall, 1998). Maybe URA can opt to make the DVARs job a separate
section in its Information Systems department as some organizations have done.

Sources of Geospatial Data

Geospatial data acquisition is the most costly GIS part with close to 80% of total GIS costs (Folger,
2009). So, for the URA to undertake this initiative, it has to prepare for this huge first cost. The
probable sources of data are; land surveyors, census takers, aerial photographers, administrators,
and even average citizens with GPS-enabled cell phones. When the revenue body has such data,
it needs spatial tools, computers and geographic mapping techniques (cartography) to use it. This
involves transforming the data from the different sources on one projection and scaling it to
analyze it together (Huurneman, et al., 2001). Figure 1 shows this under appendix 1.

GIS Data Modeling

A data model is the heart of any GIS and must, therefore, meet the working and functional
requirements of that organization (Kohler, et al., 2006). For the case of URA, the new spatial data
model must sync with the current data model running the etax system. This is because the database
has to merge attribute data in the existing system with the external spatial data. Redman (1995)
advises on using a data model that supports the GIS software and must offer extensibility to allow
integration with other information systems. Because of this, (Kohler, et al., 2006), advance the
UML data model as suitable, for universality reasons.

10
Spatial Data Analysis

Spatial data analysis involves vector or raster7 data manipulation and modeling to illuminate trends and
new information. The processes of attribute querying, spatial querying, and new dataset generation are
the key activities of spatial analysis (Pfeiffer, 1996). Therefore, the URA must take advantage of these
analytical abilities that show the hidden rental property data trends to streamline its compliance
monitoring process (Goodchild, et al., 2015).

To meet this, the URA must improve its systems to cater for simple to complicated combinations of
attribute and spatial querying. These vary from simple layer operations to multilayer operations or
topological overlays combining features from different layers to form a new map that shows new
information absent in each map. The techniques used include:

Point Pattern: Based on coordinates of the site and ideal for properties that many not be expressed as
grids (Raju, 2010). This is the most ideal in Kampala where properties can be presented as points not
grids for grid map data is not available. Pfeiffer (1996) explains that point pattern analyses are ideal for
sampled point patterns. However, (Liddel, 2008) notes the difficulty of assessing pattern randomness
using mere visual inspections on such maps.

Grid: Used to process spatial data in a special regular paced form like when comparing compliant versus
non-compliant areas (Raju, 2010; Câmara, et al., 2009). With grid analyses, a compliance probability
model that uses taxpayer behavior from returns and payments can delineate areas that are most likely to
have non-compliant taxpayers. It is expensive to put together grid data, and this is an area for a future
study.

Surface and Vector: Recommended for three-dimensional structures when multilayer operations
combine layers from different map layers to form a new map. The new map gives new
information and features that are not available in parent maps (Holmstrand, 2011). Given that
the methods explained in this section need heavy data and resources, which are not available at
URA, the point pattern analyses are the ideal method.

7
Vector data are lines or arcs while raster data are discrete cells e.g. images (Goodchild, et al., 2015).
11
How Spatial Tools Support Compliance Monitoring

Being visual media (Thrall,1993), spatial analysis tools can display relevant (tax) information as
maps, tables, and images. Thus, users (tax officers) can search and query using property attributes,
like the place and ownership. Russ(2000) notes how spatial queries support calculations, in real-
time, find specific geographic relationships and objects (such as commercial properties) that meet
the specified criteria. This way officers make intuitive judgments using returns, payments and
location-based results from the tool.

Implementing Spatial Tools

Spatial tools need skilled staff, GIS software, hardware, spatial and non-spatial maps and databases
including, CAD data, all expensive (Thrall, 1993). Attention should also be paid to;

Users: Due to the low staff skills in Uganda and East Africa at large (Franzsen, 2000; Kangave, et
al., 2016), the usability of the spatial tool is key. Else, some employees may become reluctant to
take on a difficult tool. Indeed (Rattray, 2006) advises institutions to focus more on the users of the
spatial tools, other than the technology itself. To Lisho (2007), users must perceive the tool as a
solution than a problem, it must give clear answers.

Therefore, the URA must consult staff in advance on their expectations of the tool and train them in
spatial skills to get their commitment (Redman, 2004). Above all, the leadership must buy into the
spatial tool and will to fund the initiative.

Dynamism: Spatial web maps can show dynamic and analytical information views in real-time
(Weir, et al., 2001). The analysis is possible using geo-data on the server-side or dynamically every
time the user reloads the webpage using data from dynamic sources.

In the context of the problem being investigated, the tool must dynamically output online payments,
return submissions and status via a web map. The web server generates the map using a web map
server or self-written software.

12
Data: One key issue for spatial data acquisition and management is legislation (Fadahunsi, 2010).
In most developing countries like Uganda, old legislations complicate data copyrights, dataset
integration, and data exchange standards8. This impacts on the permission to share derived data with
third-parties for analysis (Musinguzi, et al., 2012). It also raises questions on the ownership of an
‘added value’ dataset and the legal issues of responsibility for data accuracy. Without these
guidelines, several duplicated government datasets have resulted across agencies. The Ministry of
works and Transport, Uganda National Roads Authority, National Forest Authority and the
Department of Surveys and Mapping, all have spatial data with different semantics.

METHODOLOGY

Introduction

This section presents the methods that the researcher used to study the existing system and the
proposed spatial method for Uganda Revenue Authority.

Case Study Design

The researcher adopted the case study approach because of its ability to derive more realistic
responses from the tax officers. In the approach, the researcher focused on the spatial specific rental
issues to keep the study relevant. He investigated the Status of the Current System and the
Expectations for a new System using interviews and questionnaires. The study used the Krejcie
model to select respondents. According to (Krejcie & Daryle, 1970), it is important to have an
effective method of determining the sample size that properly represents a given population. 127
officers from Kampala North (Kawempe Division), Kampala East (Nakawa Division), Kampala
Central (Central Division) and Kampala South (Makindye and Rubaga Division) out of the 193 tax

8
See previous government efforts on spatial data standards
1. The Design and Development of Geographical Information System for Uganda (GoU, 2001);
2. Review of the Status of Land Information Systems in Uganda Kampala (GoU,2003);
3. Detailed Plan for the Design and Implementation of a Land Information System for Uganda (GoU,2005);
4. LIS Preliminary System Design and Architecture (GoU, 2007)

13
officers responded to questionnaires and interviews. The researcher used the SPSS statistical tool
to analyze the results which informed his opinion on the current system and the proposed system.

The study also reviewed URA forms, process documents, tax laws (Okuja, 2015) and spatial
literature to understand the methods, the current system and the spatial techniques for the problem.

Summary of Techniques Used

Interviews and Questionnaires: These tools gathered feedback on the existing compliance
monitoring mechanisms, the requirements for the spatial tool and the results of system tests. This
gave the researcher guidance and focus on the key issues of the study.

Software Development Life Cycle (SDLC): The SDLC guided the design of the spatial tool. With
it, the researcher developed an Entity-Relationship Diagram (ERD) and later, the Entity Relational
Model which defined the relationships between the data tables in the tool. The researcher drew the
Data Flow Diagrams (DFD) to show data movements, entity interfaces and the boundaries of the
tool.

Spatial Tools: The study used the QGIS tool, a lighter version of Geographic Resources Analysis
Support System (GRASS) to process and project vector base-map data. He connected QGIS to the
PostGIS and PostgreSQL database (like internet connectivity) stores and manipulated spatial data.
The map layers included; division, tax office, payments, rental, and returns. The old symbology
projection was suitable for map-server requirements. Using Macromedia Dreamweaver and the
Lizmap tools, the researcher designed the user-interface for web usage and exported the QGIS files.
He used the OSGeo4W, Python Scripts, Apache, Django and Leaflet tools to host the exported files
on the web for user access.

14
FINDINGS

Introduction

This section presents findings of the study. These cover the existing system, its analysis,
requirements identification, design and its implementation. These findings form the basis of the
tool presented in this study.

The Existing System

The paper reviewed URA’s etax system documents and systems in other countries to get a deeper
understanding of URA’s current processes and methods, their strengths and weaknesses. This
helped to find out the tool requirements.

System Analysis

The researcher analyzed the observations to understand the existing system and to find out the tool
requirements. He grouped the functional and non-functional requirements and from these, he
selected the hardware and software requirements. Then, he drew the logical data flow diagram
using the stakeholder information from the data collection process.

Weaknesses of the Existing System

From the responses gathered, the existing etax system had the weaknesses of NOT;
a) Locating multi-property owners. Staff must use personal knowledge to find taxpayers.
b) Tracking property owners after URA has rotated the officers who know them to other
offices.
c) Showing automatic dynamic data (Kangave, et al., 2016) in a concise format.
d) Offering access to necessary data for officers due to restrictive user privileges9.
e) Simplifying the user interface. Users need exceptional IT skills to analyze the data hence
withdrawing from the system.
f) Presenting data in a precise and concise way. The etax spreadsheets are too bulky.

9
See (Kangave, et al., 2016) Page 25 – Obstacles to Sharing Information within the URA
15
Figure 2 under appendix 1 shows the results.

Analysis of Requirements

The researcher tallied, coded and analyzed the requirements from the questionnaires using the
descriptive statistics tool in SPSS to get their Mean. He weighed them on a Likert scale and
presented them in Figure 3 under appendix 1.

How important are the results?

The results of the study agreed with the suggestions made through the requirements gathering
process. On average, respondents agreed to the functions that the spatial tool must offer to enhance
tax compliance.

Functional Requirements

The functional requirements define the desired behavior from the tool. It presents them as the
capabilities it offers. The spatial analysis tool should;

1. Be able to show an updated taxpayer status to users

2. Enable users to send queries and search data using over one variable
3. Be able to find and separate clients with pending payments and returns
4. Be able to name a client who owns multiple rental properties
5. Able to store correct data and allow users to download it on their computers
6. Be able to give ready online support and feedback for inquiries
7. Enable users to use it with little training
8. Enable users to find clients based on their site or tax office
9. Be able to connect to various data sources in and outside URA

Non-Functional Requirements

These requirements define the quality of the spatial tool by setting the constraints and concepts it
must satisfy. The tool must be:

16
 1. Fast enough to retrieve information as requested by users. The tool must present the output
in a clear way for easier user understanding.
2. Always accessible so that the person searching can do so at their convenience
3. Available to URA staff on the Uganda Revenue Authority intranet and any other place with
the internet
4. Maintainable by any person with average computer capabilities.
5. With a user-friendly interface which, users can learn in a short time. The tool should have
simplified user query forms to cut mistakes.
6. With proper menus from which the user can select any required data.
7. Scalable for any future uses to handle more capabilities.

Designing the Tool

The functional and non-functional requirements guided the design of the spatial analysis tool and
so the data used.

Design of the Database

The tool used the PostgreSQL geo-database which imported existing non-spatial etax data from
URA and spatial data from Makerere University. QGIS imported and exported the data using
Lizmap, PostGIS, and map-server tools.

Design of the Web Application

The researcher designed the web tool using QGIS, HTML, Leaflet and Django (Python tools) to
create user interfaces (GUIs) across which to send queries to the server. The design involved the
activities of:

a) Developing and configuring the graphical user interface

b) Automating access and integration with other systems
c) Developing “intelligent” forms to support data queries
d) Developing application scripts for complex application workflows
e) Creating custom design templates for map displays and reports

17
 f) Creating a library of standard queries accessible through a menu
g) Programming complex analysis applications using GIS and other software design tools

System Architecture

The key components of this spatial analysis tool included; a map server, a geo-database, and a web
client machine. A user submits the query via a web browser through the internet to a map-server.
Query details pass through the map-server to the geo-database.

The map-server formats the resulting data from the geo-database and feeds it back to the client
machine as a graphical map. The result is a dynamic map viewed on any web browser by the user.
Figure 4 under appendix 1 shows the interplay of the various components of the tool.

Process Modeling

The paper showed the flow of information within the tool using Data Flow Diagrams (DFDs).
These DFDs depicted the data and its flow between the tool’s database and website.

Level 0 Data Flow Diagram

The context diagram (Figure 5 – appendix1) shows the system boundaries, the external entities
that interact with the spatial tool and the major information flows between the entities of the tool.
User queries pass through a map web service that submits the query to the database server. Then,
the database returns output through the map-server and displays it on a browser.

Level 1 Data Flow Diagram

The level 1 Data Flow Diagram (Figure 6 – appendix1) shows the sub-processes and process flow
of the tool. It identifies the owner of each property with a TIN and each rental property with the
property-id. Then the TIN identifies the place, payments, and returns, from the owner of each
property. Therefore, the tool parses all user queries on any property transactions through the
property record and ownership.

18
Entity Relationship Diagram - ERD

The ERD (Figure 7 – appendix1) presents the relationship between the Division, Tax Office,
Rental Payment, Rental Return and Rental Property entities. All transactions start and end with the
rental property. All taxpayer returns and payments to URA are for a particular property in a
division, and the tax office monitors the division.

Logical Design

This section explains the logical relationships between the entities that make up this spatial tool.
The design shows the interactions between the various components of the tool as they exchange
data.

Relationships between the Entities

The study adopted its entities based on the existing etax system data. This study assumes that the
etax system has proper non-spatial data on payments, returns, and tax offices. The tool would
merge the non-spatial tax transactions, spatial rental property, spatial tax office and spatial division
data into one Kampala map.

The tool presented the rental properties and tax offices as points and the divisions as polygons.
This way the tool could carry out analyses based on either spatial or non-spatial attributes.

1. Rental Property - Rental Return Relationship

Each property can file one or many returns while a return can only be filed by the owner for
one or more properties. This results into the cardinality represented as M: M.

Files
Rental Property Rental Return

2. Rental Property – Rental Payment Relationship

19
 The rental property can remit one or many payments while a payment can only be remitted for
one or more properties. This results into the cardinality represented as M: M.

Remits
Rental Property Rental Payment

3. Tax Office – Rental Property Relationship

Each tax office oversees one or many rental properties while one rental property can report to
one or many tax offices. This results into the cardinality represented as 1: M.
Monitors

Tax Office Rental Property

4. Division – Rental Property Relationship

Each division can have one or many rental properties while each rental property can only be
in one division. This results into the cardinality represented as 1: M.

Hosts
Division Rental Property

Appendix 2 gives the details of these table structures.

DISCUSSION OF RESULTS

Introduction

This section discusses the results of implementing the spatial analysis tool. It checks the fitness of
the tool to the problems identified in the first section.

20
QGIS Development Interface

The interface (Figure 8 – Appendix 1) presents the QGIS development environment from which
the web-based interfaces were afterward developed. This is where the researcher validated and
projected the various map layers before connecting them to the Postgres database. He exported the
maps using Lizmap and hosted them on a local server connected to the Postgres geo-database. The
Leaflet and Django tools connected the map tool to the database for web access.

Web Interface

The user accesses the spatial tool home page (Figure 9 – Appendix 1) by entering its web address
(http://localhost:8000/) in the browser. The page has a menu bar on the left that links to the various
sections of this system. On the menu, users can execute pre-defined queries based on specific
attributes i.e.: TIN, Distance, Return Status, Payment Status and Location. The page also has a
support email at the bottom left for users to engage the tool administrator on any queries.

Divisional Search Interface

The divisional search interface (Figure 10 – Appendix 1) enables the user to select a division in
Kampala where s/he intends to check clients. The database queries return output presented as blue
cones in the selected division on the web map. On hovering the mouse on each cone, the tool
displays the returns and payment details of the taxpayer.

Search for Property within a Radius

The radius search interface enables the user to select the distance in kilometers from a tax office
within which to find clients. The query returns clients represented by blue cones on the web map.
It shows clients by the distance from the tax office and therefore, the tax officers can know who to
approach first or last during enforcement campaigns. On hovering the mouse on each cone, the
tool displays the returns and payments details of the taxpayer.

21
Search for a Property by Payment Status

The payments search interface enables the user to select a range of payment brackets within which
a client could fall. With the same tool, it is, therefore possible, to find clients who have made no
payment to URA and then follow them up. On hovering the mouse on each cone, the tool displays
the returns and payments details of the taxpayer. The officer can use the returned details to decide
on the correct follow-up action.

Search for a Property by TIN

The search by TIN interface enables the user to search for properties owned by the owner of a
registered TIN. This way compliance monitoring on multiple property owners becomes simple.

Search for a Property by Return Status

The returns search interface enables the user to select a particular returns status i.e. approved or
pending. At times, pending returns need URA to follow-up or send a tax assessment to the clients.
On hovering the mouse on each returned blue cone, the tax details appear and these guide the next
enforcement action.

System Testing

The researcher tested the tool following a systematic approach. During the development process,
he conducted compliance tests to make sure that the designs conform to requirements. He also
carried out unit tests to check the fitness of the various units of the tool. Then, he brought together
each software module and tested them as one tool to make sure that they met the functional,
performance and reliability requirements. At the end, the researcher executed User Acceptance
Tests (UAT) to check the user-friendliness or any errors in the tool. The test presented the
prototype to the end users (tax officers) of the system to explore and find any errors or areas for
improvement. They found errors which the researcher corrected to make sure that the tool was
error free and ready to use. At large, the test results showed users’ satisfaction with the product as
illustrated in the table below:

22
Results of Testing and Validation

Table 5.1: Results of Testing and Validation

Weakness Modification

The system is not The researcher removed the irrelevant links from the menu to keep
navigable focus on only the functional links needed in the working environment

The need to log into The researcher removed the login process since the system was to run
the system every on an intranet platform where users are already authenticated. The
time verification is via the Microsoft Active Directory server with a multi-
user sign in.

Lacks a support The researcher included a user support email at the bottom left of the
email system interface to allow users to send queries for help.

Source: Primary Data

SUMMARY, RECOMMENDATIONS, AND CONCLUSION

Summary and Policy Recommendations

This spatial tool offers many benefits including; better tax information access, informative data
presentation, simplifying taxpayer compliance analysis and availing more accurate data about
taxpayers. Locating clients can no longer be a hide and seek game and even new officers can find
the rental properties with ease on their first deployment to the field. With web maps, officers can
plan their routes to the various rental properties thus saving costs (e.g. fuel) and time during
physical inspection visits.

This tool allows for non-discriminative compliance efforts on all properties regardless of whether
they are in a known place or not. These capabilities would improve the tax register and revenue
collections. These gains call for;

23
1. Stakeholder management with government policy making arms, MLHUD, real-estate
sector players, local governments, citizens and the staff of URA. With such backing, the
government would certainly fund the required increment in staffing levels and their training
in spatial and non-spatial data pattern analysis. Training must be for the ‘right’ staff who
actually monitor compliance. In the past, the ‘wrong’ people who do not actually do such
roles have received training.

2. Physical inspection visits for all taxable property as done for Value Added Tax - VAT (and
this explains why VAT is efficient). Therefore, the tax body must physically inspect and
register all rental property to find the owners. Most rental properties have no titles of
ownership and owners are hard to track down to enforce compliance on them.

3. A national remapping exercise of all properties. The current spatial maps are obsolete (with
old street names, old building names etc.) which makes them unusable.

4. Continuous data update, system upgrade and provision of online user support. The
database administrators must also keep the spatial database independent from other systems
to keep authentic the spatial data formats, header descriptions including the reference
system and projection transformations.

5. An organized system that consolidates and reports usable rental taxpayer data. The URA
can do this by re-organizing the current etax reports to support spatial analyses. For this to
happen, URA needs a comprehensive data collection system that captures the spatial and
non-spatial attributes needed to find a property. The URA must include this in the rental
taxpayer registration process as the case is, for businesses registered with multiple
branches. Figure 11 under appendix 1 shows this loophole in URA’s registration form for
rental tax. In the registration form, (TIN Registration Template DT-1001), the taxpayer is
not required to declare the number and geographical location details of the properties s\he
owns. This is the reason URA officers hardly find multiple property owners. The URA
form (DT-1014) partly covers this loophole for businesses with multiple branches, but
rental properties. If this approach is to bridge this spatial loophole, the form section must
strictly capture spatial location data (like Parcel Number, block, plot and coordinate

24
 locations) using GPS capture devices. This data is missing in the current form in Figure 12
under appendix 1. The spatial tool must then automatically merge the non-spatial etax data
with spatial data. Future efforts must use polygon and 3D GIS maps as opposed to point
maps to cater for the high-rise buildings in Kampala. The 3D data at National Water and
Sewerage Corporation (NWSC) and KCCA can support a study on the rental income
taxation of skyscrapers. On such properties, taxpayers may vary because of the building
floor or sub-renting.

Conclusion

The spatial tool is for use by tax officers to check and analyze rental tax compliance to boost revenue
collections. Certainly, the tool improves the client register and cuts the long-run tax administrative
costs in the wake of the meager resources that have for long, frustrated compliance initiatives.
Therefore, these findings are not only relevant for Kampala but also for Uganda’s countrywide
initiative of improving domestic revenue mobilization. This tool will enhance the enforcement of
compliance by offering officers the analytical capabilities and insights which they would never
have had with the old spreadsheet data tables. This, however, depends on the hardware and
software, the reliability and scale of the data fed into the tool, and the staff who use it.

25
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APPENDIX 1 - FIGURES

Figure 1: The Overlay of Spatial Data Layers

Source: (Folger, 2009)

28
Figure 2: Analysis of the Existing System

ANALYSIS OF THE EXISTING SYSTEM

100
90
80
70
60
50
40
30
20
10
0
Access all taxpayer Find the physical Capture all Identify a client Easily understand
information and location of any necessary data with more than taxpayer
reports rental property about a registered one rental compliance status
rental property property

Strongly Disagree Disagree Not Sure Agree Strongly Agree

Source: Primary Data

Figure 3: The Mean of Requirements

SUMMARY OF REQUIREMENTS

Analyse Clients

Complex Technology
REQUIREMENTS

Independent

Online Support

Show Multiple Owners

Free Access

Updated Status
0 1 2 3 4 5 6
LIKERT SCALE

Source: Primary Data

29
Figure 4: System Architecture

HTTP
Request Info Request

Information
HTTP Response

Map / Web Information

Client
Info

Database Server

Source: Author

Figure 5: Context diagram of the GIS Spatial Analysis Tool

Source: Author
30
Figure 6: Level 1 Data flow Diagram for the Spatial Rental Tax Tool

Source: Author

31
Figure 7: Entity Relationship Diagram for the Spatial Tool

Source: Author

Figure 8: Quantum GIS Development Interface

Source: Spatial Tool

32
Figure 9: QGIS User Interface

Source: Spatial Tool

Figure 10: Searching for properties in a particular division

Source: Spatial Tool

33
Figure 11: The Current Registration Form (TIN Registration Template DT-1001)

Rental Tax
Registration
Requires
Yes / No

More data is
collected
during
business
registration
including
other branch
locations

Source: http://ura.go.ug (2016)

Figure 12: Registration form for Business Branches (DT-1014)

Source: http://ura.go.ug (2016)

34
APPENDIX 2 - TABLES

The Structure of Relations for the Geo-database

I. Structure of Rental Return relation

Field Name Data type Constraint

Pid Integer Not null. Check

TIN Character varying(10) Not null

Name Character varying(200) Not null

Category Character varying(50) Not null

Period_start Date Not null

Period_end Date Not null

Payment_deadline Date Not null

Ack_no Character varying(13) Not null. Primary key

Ack_date Date Not null

Ack_amount Double precision Not null

Status Character varying(20) Not null

Pending_with Character varying(100) Not null

Pending_deadline Date Not null

Approved_amount Double precision Not null

Table 1.3: Rental Return relation

II. Structure of the Rental Property relation

Field Name Data type Constraint

Pid Integer Not null. Primary Key

35
 Field Name Data type Constraint

TIN Character varying(10) Not null

Name Character varying(200) Not null

Category Character varying(50) Not null

geom Geometry(Point) Not null. Unique. Check

Table 4.4: Rental Property relation

III. Structure of the Rental Payment relation

Field Name Data type Constraint

TIN Character varying(30) Not null

Name Character varying(200 Not null.

Tax_type Character varying(50) Not null

PRN Character varying(13) Not null. Primary key

Payment_type Character varying(20) Not null

Bank Character varying(100) Not null.

Amount Double precision Not null

Payment_ref_date Date Not null.

Date_received Date Not null

Table 4.5: Rental Payment relation

36
IV. Structure of the Tax Office relation

Field Name Data type Constraint

Id Integer Not null. Primary key

Name Character varying(80) Not null. Unique

Division_id Integer Not Null. Foreign key

Geom Geometry Not null

(multipolygon,4326)

Table 4.6: Tax Office relation

V. Structure of the Division relation

Field Name Data type Constraint

Id Integer Not null. Primary key

Name Character varying(80) Not null. Unique

Geom Geometry Not null

(multipolygon,4326)

Table 4.7: Division relation

37