Managing payroll can be a challenge, but understanding the fundamentals of PAYE is essential to keeping your business compliant and avoiding costly errors with the Uganda Revenue Authority.

PAYE is a method used to withhold tax on payments made to employed persons/ or persons in gainful employment

Contrary to common belief, PAYE is not a tax. The tax is Income tax on individuals and PAYE is a method used to collect this tax.

An employer is required to withhold income tax from salaries paid to its employees and remit this to the tax authority by the 15th day of the subsequent month following which the salary has been earned.

Thresholds are as follows;

1. There is an exempt threshold for persons earning 235,000 or below

PAYE is a form of withholding tax (WHT) whose purpose is to collect tax at source.

PAYE is the responsibility of the employer and hence the employer has to ensure that it is appropriately computed and remitted on time

During the initial registration for the Tax Identification Number (see an earlier on the same), the excel form to be filled will contain a section which asks ‘Why do you need a TIN’

If you are an employer, under the various drop-down buttons you will click yes to PAYE which will automatically render you a WHT agent through PAYE.

Therefore, you register for PAYE during the process of TIN registration.

If your business is already operational but not yet registered for PAYE, you can manually amend your TIN registration online to add the tax head. Alternatively, the URA may perform a back-end amendment if they find evidence of employees without corresponding PAYE registration.

Missing the 15th-day deadline can result in late payment interest and penalties.

• Interest: Typically charged at 2% per month on the unpaid amount.
• Amnesty Note: For the 2025/2026 period, a tax amnesty is available until June 30, 2026, allowing for a waiver of interest and penalties if the principal tax due by June 30, 2024, is paid in full.