What Is Paye In Uganda?
Pay as You Earn (PAYE) – Filing by the employer is on a monthly basis by the 15th day of the month following the month in which payment was made.
How To Register For Paye In Uganda?
What is the pay as you earn (PAYE) for different income groups in Uganda. Answer. Monthly Emoluments Not exceeding Shs 130,000. Tax Rate: NIL. Monthly Emoluments Exceeding Shs 130,000 but not exceeding Shs235,000.
Resident individual rates per month, in Ugandan shilling (UGX)
| Chargeable income | Rate of Tax |
| Not exceeding UGX235,000 per month | Nil |
| Exceeding UGX235,000 per month but not exceeding UGX335,000 per month | 10% on the amount exceeding UGX235,000 |
| Exceeding UGX335,000 but not exceeding UGX410,000 per month | UGX10,000 per month plus 20% of the amount exceeding UGX335,000 per month |
| Exceeding UGX410,000 | UGX25,000 plus 30% of the amount exceeding UGX410,000; andWhere the chargeable income of an individual exceeds UGX10,000,000, an additional 10% on the amount exceeding UGX10,000,000 per month |
How Do I Pay My PAYE?
After filing the return online, you are required to generate a payment slip via iTax which you will present at any of the KRA appointed banks to pay the tax due. You can make payments via Mpesa. Use the KRA Pay bill number 572572.
Nonresident Individual Rates Per Month Paye In Uganda
| Chargeable income | Rate of Tax |
| Not exceeding 335,000 per month | 10% |
| Exceeding UGX335,000 per month but not exceeding UGX410,000 | UGX 33,500 plus 20% of the amount by which the amount exceeds UGX335,000 |
| Exceeding UGX410,000 | UGX 48,500 plus 30% of the amount exceeding UGX410,000; andWhere the chargeable income of an individual exceeds UGX10,000,000, an additional 10% on the amount exceeding UGX10,000,000 per month. |
Local Service Tax Paye In Uganda
This is deducted within the first quarter of the Individual’s fiscal year.This may be submitted either as a lump sum.Local Service Tax rates
| Amount of monthly income | LST payable | |
| earned net of tax (UGX) | per year (UGX) | |
| 1 | >UGX100,000 but<UGX200,000 | UGX5,000 |
| 2 | >UGX200,000 but<UGX300,000 | UGX10,000 |
| 3 | >UGX300,000 but<UGX400,000 | UGX20,000 |
| 4 | >UGX400,000 but<UGX500,000 | UGX30,000 |
| 5 | >UGX500,000 but<UGX600,000 | UGX40,000 |
| 6 | >UGX600,000 but<UGX700,000 | UGX60,000 |
| 7 | >UGX700,000 but<UGX800,000 | UGX70,000 |
| 8 | >UGX800,000 but<UGX900,000 | UGX80,000 |
| 9 | >UGX900,000 but<UGX1,000,000 | UGX90,000 |
| 10 | >UGX1,000,000 | UGX100,000 |
Residents Paye In Uganda
The Ugandan Income Tax Act, Cap 340 states that for an individual to be considered a resident person, they should;
- have a permanent home in Uganda; or be present in Uganda –
- for a period of, or periods amounting in aggregate to, 183 days or more in any 12-month period that commences or ends during the year of income; or
- during the year of income and in each of the 2 preceding years of income for periods averaging more than 122 days in each such year of income.
Non-residents Paye In Uganda
A person is not resident if they do not meet the parameters for a resident individual.Is there a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/jurisdiction for more than 10 days after their assignment is over and they repatriate.
Termination Of Residence Paye In Uganda
When leaving the country/jurisdiction, an individual is required to de-register for taxes and notify the tax authorities and immigration. It is also advisable for the exiting assignee to obtain a tax credit certificate as it may be needed in the assignee’s home country/jurisdiction as evidence that their income was taxed while in Uganda.If the assignee has been contributing to the National Social Security Fund, they will be required to make an application for the social security claim if they have been with the fund at-least three years.When arriving in Uganda, an assignee will be required to apply for and obtain a Tax Identification Number, a social security number and the relevant visas/work permits. Social security registration is mandatory ONLY if the expatriate intends to stay in Uganda for more than 3 years and the employer has at least 5 employees.
Departure Tax Paye In Uganda
There is no restriction, however the assignee would be required to obtain a tourist visa.
Filing Requirements For Paye In Uganda
No. Once an assignee has left Uganda and de-registered for taxes, there is no requirement to file tax returns in Uganda.
Economic Employer Approach For Paye In Uganda
Do the taxation authorities in Uganda adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Uganda considering the adoption of this interpretation of economic employer in the future?The taxation authorities exempt employment income if the conditions as set out in Article 15 of the OCED treaty are met. For anyone to benefit from the treaty, they must be resident in the other contracting state.
Types Of Taxable Compensation For Paye In Uganda
Employment income including benefits of any kind provided to the assignee by virtue of their employment in the company. The taxable benefits include:
- accommodation,
- meals (provided they are not provided at the employers’ premises or during the course of operations and to all staff on an equal basis)
- private travel
- and any other allowance or benefit provided to the employee.
Intra-Group Statutory Directors For Paye In Uganda
Will a non-resident of Uganda who, as part of their employment within a group company, who is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Uganda trigger a personal tax liability in Uganda, even though no separate director’s fee/remuneration is paid for their duties as a board member?
Yes.
Directorship of the company is defined as employment under Section 2(z) (ii) of the Income Tax Act. Based on this, the remuneration to a Director who is a member of a Board of Directors for a company situated in Uganda would be subject to tax in Uganda.
a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Uganda?
Yes. As long as the Director is remunerated for their role as Director of the Ugandan entity, their remuneration will attract tax in Uganda.
b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Uganda (i.e. as a general management fee where the duties rendered as a board member is included)?
Yes. In case the costs are directly or indirectly charged to the company in Uganda, the taxation of this income is triggered irrespective of whether the member is physically present at the board meetings.
c) In the case that a tax liability is triggered, how will the taxable income be determined?
The taxable income would be the cost that is directly or indirectly booked relating to the payment to the directors for their services to the Ugandan Company.
Tax-Exempt Income For Paye In Uganda
Are there any areas of income that are exempt from taxation in your country/jurisdiction? If so, please provide a general definition of these areas.
- Any benefit in kind that is provided to an employee with a value not exceeding UGX10,000 (currently equivalent to 2.8 US dollars (USD))
- 10 percent monthly NSSF contribution by the company for its employees.
- Medical and life insurance provided to an employee. Please note that Life insurance exemption only applies where the employer is a tax paying entity.
- Cost of passage to and from Uganda in respect to the employment to be exercised in Uganda (at the start and at the end of the employment contract).
Expatriate concessions For Paye In Uganda
Yes. This is dependent on the bi-lateral agreements between the Government of Uganda and the Foreign Government or International Development Agency.
Salary Earned From Working Abroad For Paye In Uganda
For assignees who meet the definition of residents as defined above, income from all geographical areas is taxed in Uganda. This rule does not apply to short term residents who are present in Uganda for a period of not more than 2 years.However, it should be noted that section 80 of the Income Tax Act, exempts foreign employment income to the extent there is evidence that Income Tax was paid on it in the foreign country where the service was rendered.
Dividends, Interest, And Rental Income For Paye In Uganda
Yes.
We summarize below the applicable rates of tax.
| Description | Amount of tax |
| Dividend and interest income | 15% |
| Rental income | For resident individuals, the tax rate is 30% of the chargeable income.Nonresidents are taxed at 15% on the ross rental income earned |
Pre-CGT Assets For Paye In Uganda
Yes. The following categories are exempt from CGT:
- a transfer of an asset between spouses
- a transfer of an asset between former spouses as part of a divorce settlement of bona fide separation agreement
- an involuntary disposal of an asset to the extent to which the proceeds are reinvested in an asset of a like kind within 1 year of the disposal; or
- the transmission of an asset to a trustee or beneficiary on the death of a taxpayer. any capital gain not included in business income
Deemed Disposal And Acquisition For Paye In Uganda
Yes.
Assets are deemed to be disposed when the asset has been:
- sold, exchanged, redeemed or distributed by the taxpayer transferred by the taxpayer by way of gift
- destroyed or lost; or
- when there is a direct or indirect change of ownership of the company by 50 percent or more.
Relief For Foreign Taxes For Paye In Uganda
Yes foreign tax credits are allowed, to the extent that the foreign tax was paid and does not exceed the tax that would have ordinarily been paid had the income been earned in Uganda.We also have double tax treaties with 8 countries.
General Tax Credits For Paye In Uganda
Provisional tax paid, Foreign tax credits, Withholding tax credits.
Sample Tax Calculation For Paye In Uganda
The taxpayer’s base salary is Ugx 353398400.00 and the calculation covers 3 years.
| Years of income | 2019Ugx | 2020Ugx | 2021Ugx |
| Salary | 353398400.00 | 353398400.00 | 353398400.00 |
| Bonus | 70679680.00 | 70679680.00 | 70679680.00 |
| Cost-of-living allowance | 35339840.00 | 35339840.00 | 35339840.00 |
| Housing allowance | 42407808.00 | 42407808.00 | 42407808.00 |
| Company car | 44174800.00 | 44174800.00 | 44174800.00 |
| Moving expense reimbursement | 70679680.00 | 0 | 70679680.00 |
| Home leave | 0 | 17669920.00 | 0 |
| Education allowance | 10601952.00 | 10601952.00 | 10601952.00 |
| Interest income from non-local sources | 21203904.00 | 21203904.00 | 21203904.00 |
Other Assumptions For Paye In Uganda
- All earned income is attributable to Ugandan sources, except interest income. The applicable tax rates are applied for each of the years tax calculations.
- Bonuses are paid at the end of each tax year and accrue evenly throughout the year.
- The company car is used for business and private purposes and originally costs Ugx 176699200.00.
- The employee is deemed resident throughout the assignment.
- Tax treaties are ignored for the purpose of this calculation, i.e. this is only a Ugandan tax calculation.
- The employee lives in Kampala Uganda. The spouse has no income.
Calculation Of Taxable Income For Paye In Uganda
| Year-ended | 2019Ugx | 2020Ugx | 2021Ugx | |
| Days in Uganda during year | 1289904.16 | 1289904.16 | 1289904.16 | |
| Earned income subject to income tax | ||||
| Salary | 353398400.00 | 353398400.00 | 353398400.00 | |
| Bonus | 70679680.00 | 70679680.00 | 70679680.00 | |
| Cost-of-living allowance | 35339840.00 | 35339840.00 | 35339840.00 | |
| Housing allowance | 42407808.00 | 42407808.00 | 42407808.00 | |
| Company car | 61844720.00 | 22970896.00 | 18376716.80 | |
| Moving expense reimbursement | 0 | 0 | 0 | |
| Home leave | 0 | 17669920.00 | 0 | |
| Education allowance | 10601952.00 | 10601952.00 | 10601952.00 | |
| Personal income | 574272400.00 | 553068496.00 | 530804396.80 | |
| Interest income | 21203904.00 | 21203904.00 | 21203904.00 | |
| Annual nontaxable threshold | -2692895.81 | -2692895.81 | -2692895.81 | |
| Total taxable income | 592783408.19 | 571579504.19 | 549315404.99 |
Calculation Of Tax Liability For Paye In Uganda
| 2019Ugx | 2020Ugx | 2021Ugx | |
| Taxable income as above | 592783408.19 | 571579504.19 | 549315404.99 |
| Total Ugandan tax | 224528139.46 | 216110189.57 | 207140938.18 |
| Less: | |||
| Foreign tax credits | 0 | 0 | 0 |
It is assumed that the car is available for use by the employee for both private and official use throughout the year. There is no contribution by the employee to use the car.Please note that this is not included as taxable income to the extent to which it relates to passage to and from Uganda after end of contract for a non-resident expatriate in Uganda specifically to perform employment services under the contract in question.
Exchange rate:UGX3,700
Special Considerations For Short-Term Assignments For Paye In Uganda
Residency rules
Payroll considerations
Taxable income
Additional considerations
For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 2 year.
Residency Rules For Paye In Uganda
Yes. Expatriates who are short term residents are only taxed on income sourced from Uganda.
Payroll Considerations For Paye In Uganda
Yes. A short-term resident will be taxed only on income sourced in Uganda. If they earn employment income, it will be taxed through the PAYE system.
Taxable Income For Paye In Uganda
Income sourced in Uganda.
Local Taxes For Paye In Uganda
Customs in case the assignee imports goods,Stamp duty in case an assignee engages in transactions subject to stamp duty e.g. purchase of land or building.Excise duty on purchases or transactions subject to excise duty as a final consumer.Advance tax for transport services.