EXPLAINED! All you need to know about URA’s new tax rates on PAYE
Uganda Revenue Authority (URA) has defended the new tax rate of 40% on Pay As You Earn (PAYE) arguing that the new rate is intended to streamline payment of taxes on people who have more than one job and isn’t meant to increase the rate of PAYE from the renown 30%.
The clarification was made by John Musinguzi, Commissioner General URA, while appearing before Parliament’s Trade Committee that was scrutinising petitions from traders over the regressive tax regime that has crippled activities in the business community.
The Commissioner General’s remarks were in response to a question posed by Gaffa Mbwatekamwa (Igara West) who tasked URA to clarify on reports that PAYE has been increased from 30% to 40%.
“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 from30% to 40% 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,” said Mbwatekamwa.
The lawmaker’s concerns were in response to a notice URA posted alerting taxpayers that effective 4th October 2022, there will be changes to the monthly VAT Return and PAYE Return templates, indicating that for purposes of filing for the monthly of September 2022 and subsequent months, taxpayers are advised to download the new enhanced return templates from the URA.
According to URA, in the revised template under schedule 1 of the monthly PAYE return, the tax rate for computation of PAYE for employees liable to fixed rate has been adjusted from 30% to 40%.
In his response, Musinguzi argued URA has no right to increase tax rate even by 1% leave alone rise from 30-40%, saying that what is provided for in the law is 40% for the highest bundle of employees but the template we have been using 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,” explained Musinguzi.
In the FY 2022/2023 URA was mandated to collect revenue to a tune of Shs25.4Trn, up from Shs22.4Trn the Revenue body was projected to collect in 2021/2022 although the body failed to hit this target by Shs2Trn.(DO YOU HAVE A HOT STORY (CHEATERS, DIVORCE, VIDEOS, CORRUPTION, LAND WRANGLES, EXPOSES …ETAL) YOU WOULD LIKE US TO PUBLISH? CALL/TEXT/WHATSAPP 0777959024 OR EMAIL [email protected])