Local hotel tax: what a Ugandan lodge collects per room per night
Who pays local hotel tax in Uganda, the rates per room per night, the KCCA till book, the monthly remittance and the 40% surcharge for unremitted tax.
Every lodge, guesthouse and hotel in a Ugandan town collects a small tax on behalf of the council each night a room is occupied. It is called local hotel tax (LHT), it is paid by the guest, and the owner is only the collector. Because the amounts are small, it is often the one line that nobody on the front desk is quite sure how to record. This post sets out what the law asks for and how to keep the record straight.
Who the tax is for and who actually pays
The Uganda Revenue Authority describes local hotel tax as "a tax levied and paid by room occupants of Hotel and lodges", charged "per room per night and is paid by the room occupant". The hotel collects it and remits it to KCCA, a municipal council or a town council every month. URA adds a point that matters for your books: the money is not revenue of the hotel owner, and it is therefore not a deductible expense either, because "this revenue is not recognized in the records of the hotel owner".
Kampala Capital City Authority's guidance quotes the Local Governments Act definition of a hotel as "a house intended for accommodating travelers or visitors for payment", and says that by implication a hotel can be "a hotel, an inn, a guesthouse, a serviced apartment, a motel or any suitable structure for a commercial residence". If you sell a bed for the night, the tax applies to you.
The rates per room per night
The rates depend on the category of the hotel and the price of the room. URA and KCCA publish the same table:
| Category | Rate per room per night |
|---|---|
| Five and four star hotels | USD 2 |
| Three and two star hotels, and other hotels charging above UGX 50,000 a night | UGX 2,000 |
| Hotels, lodges and guesthouses charging UGX 10,000 up to UGX 50,000 a night | UGX 1,000 |
| Hotels and lodges charging less than UGX 10,000 a night | UGX 500 |
The tax is per room, not per guest, and it is per night. A double room sold for UGX 120,000 to two guests for three nights carries UGX 6,000 of local hotel tax in total.
The till book and the records the council can ask for
KCCA's FAQ says that hotel owners are "obliged to levy and collect Local Government Hotel tax on behalf of Kampala Capital City Authority" and that collections "are recorded on a daily basis in a KCCA till book issued by KCCA". The documents the authority lists for managing the tax are the KCCA collection till books, the hotel's own receipt books, the hotel registers, and "daily return summary forms showing daily rooming lists". Authorised revenue officers may access hotel records on request during official time, and once the records are approved they issue a payment advice form for the amount due. Payment can be made by electronic funds transfer, bank draft or at a bank.
In practice this means your night audit needs to produce one number: rooms occupied last night, by rate band. If the rooming list and the folios agree, the till book is a copy of the same figure.
What happens if the money is not remitted
Because the owner is holding money that belongs to the council, the penalty for keeping it is heavy. KCCA states that where part or all of the tax collected "remains un remitted at the end of a financial year, the hotel owners/ managers will be required to pay the outstanding tax including a surcharge of 40% within two months of the notice", and that the authority may sue the hotel if it still does not comply.
Keeping it out of your revenue
Two habits avoid most of the confusion:
- Show the tax as its own line on the guest's bill, after the room rate and VAT where you are VAT registered. The guest sees what they paid and your room revenue report stays clean.
- Post the collection to a liability account, not to sales. When you pay the council each month, you clear the liability. Your profit and loss never sees the money, which is exactly how URA says it should be treated.
If you also run a restaurant or bar in the property, keep the room night tax on the room folio only. Food and drink are not room occupancy and do not attract local hotel tax; they attract VAT at 18% if you are VAT registered.
A monthly routine for a small lodge
- Each morning, confirm last night's rooming list against the folios closed and the rooms still occupied.
- Record the count by rate band in the till book the council issued.
- At month end, total the till book, prepare the return and pay through the channel your council accepts.
- File the payment advice and proof of payment with the month's returns, because the revenue officer may ask for the trail later.
The tax is small per night, but it is a legal duty with a 40% surcharge behind it. Treat it as money held in trust, record it once a day, and it will never be a problem.
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