Accountancy in Uganda

>> Employment in Uganda

PAYE

Every employer is required to deduct tax from payments made to employees in respect of employment income. The PAYE rules set out the manner in which this is to be done.

Under the PAYE rules all deductions made by an employer must be paid to the domestic Tax department before the Fifteenth day of the month following the month in respect of which the deductions are made. Although the return is filed electronically, a hard copy of the filed return is requires within 10 days after filing online.

No deduction is allowed for PAYE except local service tax.

Tax rates for resident individuals are different from those of non-resident individuals.

PAYE must be calculated on basic salary of an employee including all benefits whether in cash or in kind12. The individual is allowed a threshold before arriving at the tax payable. Benefits in kind are measured in reference to the market value of such benefits; these benefits include housing, car benefit, loan benefit, provision of a domestic servant among others

For loans, an employee derives a benefit equal to the difference between the rate at which the employer has granted the loan to the employee and the statutory rate by the central Bank, multiplied by the amount of loan acquired.

Monthly PAYE tax rates applicable to resident individuals are as below:

Chargeable income per month Rate of Tax
0- 235,000 Nil
235,000-335,000 10% of the amount by which chargeable income exceeds Ushs. 235,000
335,000 – 410,000 Ushs. 10,000 plus 20% of the amount by which chargeable income exceeds Ushs. 335,000
Over 410,000 a) Ushs. 25,000 plus 30% of the amount by which chargeable income exceeds Ushs. 410,000, and

b) Where the chargeable income of an individual exceeds Ushs. 10,000,000 an additional 10% charged on the amount by which chargeable income exceeds Ushs. 10,000,000

Monthly PAYE tax rates applicable to non-resident individuals are as below13:

Chargeable income per month Rate of Tax
0- 335,000 10%
335,000-410,000 Ushs 33,500 plus 20% of the amount by which chargeable income exceeds Ushs. 335,000
Over 410,000 a) Ushs. 48,500 plus 30% of the amount by which chargeable income exceeds Ushs. 410,000, and

b) Where the chargeable income of an individual exceeds Ushs. 10,000,000 an additional 10% charged on the amount by which chargeable income exceeds Ushs. 10,000,000

Part-time allowances/earnings are taxed at a flat rate of 30% of the gross.

12 Extracted from section 15 of the Income Tax Act as amended in 2017.

13 Extracted from the third schedule part 1 (i) of the Income Tax Act as amended 2017.

National social security fund

Contributions made for NSSF may be standard contributions or special contributions, depending on the eligibility status of an employee. These contributions are exempt from tax on the individual and also allowed as a deduction to the person making the deductions.

Standard contributions

These are made by eligible persons who are above the age of 16 but below the age of 55. They do not include:

  1. An employee employed in exempt employment;
  2. A non-resident employee;
  3. An employee not employed in Uganda.

Eligible individuals’ contribution to the National Social Security Scheme is 5% of gross cash wages. The 5% social security contributions should be paid on gross wages (cash wages) not taking into consideration PAYE or LST paid and is hence not tax deductible.

The employer’s contribution is 10% of the employee’s gross cash wages (cash payments)14. The employer’s contribution is tax deductible on the employer.

14 Extracted from the NSSF Act.

Special contributions

Special contributions are made by employers and are computed as 10% of the employee’s gross wages.

Employers are required to make special contributions to the NSSF in respect to the following individuals:

  1. a non-resident employee who is not an eligible employee;
  2. an employee of or above the age of fifty-five years in respect of whom the Minister has specifically applied the provisions of this section by statutory order;
  3. an eligible employee,

Latest version updated 11th April 2019

Country Breakdown

44.27

Million

Population

USh

Ugandan shilling

Currency

$ 25.89

Billion

GDP

241,037

km2