[Uganda] Revenue Authority’s new tax rates on PAYE explained

The Uganda Revenue Authority (URA) has defended the new tax rate of 40 per cent on Pay As You Earn (PAYE) arguing that the new rate is intended to streamline the payment of taxes for people who have more than one job and isn’t meant to increase the rate of PAYE from the current 30 per cent, Red Pepper reports.

John Musinguzi - Commissioner General of the URA - explained the reason for the new rate in an appearance before the Ugandan Parliament’s Trade Committee as it considered petitions from traders over the regressive tax regime that has crippled activities in the business community.

The Commissioner General’s remarks reportedly came in response to a question posed by Gaffa Mbwatekamwa (Igara West) who asked the URA to clarify reports that PAYE has been increased from 30 per cent to 40 per cent.

“They mentioned that they were given targets and they are concentrating on those targets, that is why there is already a notice that PAYE has been increased from 30 per cent to 40 per cent and yet the Commissioner General said there are no new tax measures and they said people lost jobs, which means that moment you increase PAYE, either people will under-declare or go,” Mr Mbwatekamwa said.

The lawmaker’s concerns reportedly followed a URA notice alerting taxpayers that from October 4, 2022, changes to the monthly VAT Return and PAYE Return templates would be in effect and that when filing for the month of September 2022 and subsequent months, taxpayers are advised to download the new enhanced return templates from the URA.

According to the URA, in the revised template under schedule 1 of the monthly PAYE return, the tax rate for computation of PAYE for employees liable for the fixed rate has been adjusted from 30 per cent to 40 per cent.

In his response, Mr Musinguzi stated that the URA has no right to increase the tax rate even by 1 per cent, let alone a rise from 30-40 per cent. He said that what is provided for in the law is 40 per cent for the “highest bundle of employees” but the template being used is limiting.

“The secondary category that has a second employment and you fall in that category, the template we have been using has been limited so we have changed that template. So we thought it was important so that people know that they will not be constrained to declare the same amount of PAYE limiting. We aren’t changing, we are only allowing people who have more than one job to aggregate their income and pay the right tax,” Mr Musinguzi said.

Source: Red Pepper

(Quotes via original reporting)

The Uganda Revenue Authority (URA) has defended the new tax rate of 40 per cent on Pay As You Earn (PAYE) arguing that the new rate is intended to streamline the payment of taxes for people who have more than one job and isn’t meant to increase the rate of PAYE from the current 30 per cent, Red Pepper reports.

John Musinguzi - Commissioner General of the URA - explained the reason for the new rate in an appearance before the Ugandan Parliament’s Trade Committee as it considered petitions from traders over the regressive tax regime that has crippled activities in the business community.

The Commissioner General’s remarks reportedly came in response to a question posed by Gaffa Mbwatekamwa (Igara West) who asked the URA to clarify reports that PAYE has been increased from 30 per cent to 40 per cent.

“They mentioned that they were given targets and they are concentrating on those targets, that is why there is already a notice that PAYE has been increased from 30 per cent to 40 per cent and yet the Commissioner General said there are no new tax measures and they said people lost jobs, which means that moment you increase PAYE, either people will under-declare or go,” Mr Mbwatekamwa said.

The lawmaker’s concerns reportedly followed a URA notice alerting taxpayers that from October 4, 2022, changes to the monthly VAT Return and PAYE Return templates would be in effect and that when filing for the month of September 2022 and subsequent months, taxpayers are advised to download the new enhanced return templates from the URA.

According to the URA, in the revised template under schedule 1 of the monthly PAYE return, the tax rate for computation of PAYE for employees liable for the fixed rate has been adjusted from 30 per cent to 40 per cent.

In his response, Mr Musinguzi stated that the URA has no right to increase the tax rate even by 1 per cent, let alone a rise from 30-40 per cent. He said that what is provided for in the law is 40 per cent for the “highest bundle of employees” but the template being used is limiting.

“The secondary category that has a second employment and you fall in that category, the template we have been using has been limited so we have changed that template. So we thought it was important so that people know that they will not be constrained to declare the same amount of PAYE limiting. We aren’t changing, we are only allowing people who have more than one job to aggregate their income and pay the right tax,” Mr Musinguzi said.

Source: Red Pepper

(Quotes via original reporting)