Employer Tax Contributions

Tax Type	Rate	Base
PAYE (Resident)	Progressive rates: Nil up to UGX 235,000; 10-40% above	Employee's gross employment income
PAYE (Non-Resident)	10% on income not exceeding UGX 335,000; progressive rates up to 40%	Employee's gross employment income
NSSF	10% (employer contribution); 5% (employee contribution)	Employee's gross salary (excluding non-cash benefits)
Withholding Tax (WHT)	6% (goods & services by government/designated agents); 15% (various payments including professional fees to non-residents, dividends, interest)	Gross amount of payment

Filing & Compliance

• PAYE and NSSF returns and payments are due by the 15th day of the month following the month in which the tax was withheld or contributions are due.
• Annual PAYE reconciliation is due within four months after the end of the tax year (which runs from July 1 to June 30).
• WHT returns are filed by the 15th of the month following the withholding.

In Uganda, employee tax deductions encompass several areas, including Pay As You Earn (PAYE) income tax, National Social Security Fund (NSSF) contributions, and Local Service Tax (LST).

PAYE (Pay As You Earn)

PAYE is calculated based on progressive tax bands. The tax-free threshold is UGX 2,820,000 annually. Tax rates vary from 10% to 30% based on income levels, with an additional 10% for income above UGX 120,000,000.

Example: An employee earning UGX 10,000,000 monthly falls into the highest tax bracket. The applicable calculation would involve deducting the lower thresholds and applying the relevant percentages for each band. An additional 10% is applied for the income exceeding UGX 10,000,000 annually.

NSSF (National Social Security Fund)

NSSF contributions total 15% of an employee's gross monthly salary. Typically, 5% is deducted from the employee's salary, while the employer contributes the remaining 10%.

Example: For a monthly salary of UGX 1,000,000, the employee contributes UGX 50,000, and the employer contributes UGX 100,000.

LST (Local Service Tax)

LST is paid to the local government where the employee resides. It is deducted by the employer in four equal installments between July and October. The rates are dependent on income brackets.

Other Deductions

Other potential deductions include:

• Medical expenses reimbursements to employees.
• Employee share acquisition scheme benefits.
• Passage costs reimbursements.

Employer Responsibilities

Employers are responsible for deducting and remitting PAYE, LST, and their portion of NSSF contributions. They must also maintain accurate employee records and file necessary tax returns. PAYE and NSSF contributions are due by the 15th of the following month. LST is payable in four installments between July and October.

It's important to note that tax laws and regulations are subject to change. This information is current as of February 5, 2025. It's always advisable to consult official government resources or a tax professional for the most up-to-date information.