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UGANDA
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Uganda Payroll and Employer of Record: Employment Contracts
Any foreign national planning to go to Uganda for employment will need to get a work permit. This obligation applies to both paid and volunteer labor. Before beginning the application procedure, foreign employees should carefully select the appropriate type of work permit. The following work permit types are available to foreigners in Uganda:
Class A and A2 work visas are accessible to employees of the government and diplomatic services, as well as government contractors.
Class B: This work visa is intended for foreign people who intend to engage in Uganda’s agriculture business.
Class C: This permit is intended for foreign nationals who intend to invest in the mining business.
Class D: This work permit is intended for individuals who want to engage in business or commerce.
Class E: Manufacturers that want to engage in or start a manufacturing firm in Uganda should apply for this type of work permit.
Class F: This permission is for working professionals who want to visit Uganda to exercise their profession.
Glass G1 and G2: These work permits are granted to missionaries, volunteers, and foreign nationals who work for non-governmental organizations (NGOs).
PAID TIME OFF
Annual Vacation
An employee is entitled to at least 21 days of paid yearly leave in a row. National and religious holidays are not taken into account. Collective agreements must include at least one day of paid annual leave for every 17 days the employee worked or was entitled to be paid. During national and officially recognized public holidays, employees should be entitled to paid time off.
Sick
When a worker becomes unwell, his or her right to work and earn a living should be preserved. Sickness benefits may not be paid during the first three days of your absence, according to national labour regulation. A worker should be entitled to an income at the very least throughout the first six months of sickness. This revenue should be at least half of the minimum wage. (Countries are allowed to choose a system that provides 60% of previous pay for the first 6 months or even the first year of illness.) A worker must have the right to compensated sick leave.
During an illness, a worker should be entitled to medical care at no extra expense. Employees and their families should have access to the bare minimum of medical care at a reasonable cost. A worker should not be fired during the first six months of sickness.
If a worker becomes incapacitated as a result of an occupational sickness or accident, he or she is entitled to a greater payment. In the event of temporary or total incapacity/disability, a worker may be paid at least 50% of his average income, while in the event of fatal injury, survivors may be paid 40% of the dead worker’s typical wage in monthly instalments.
Maternity
During pregnancy and maternity leave, a worker should be entitled to receive medical and midwifery care. During pregnancy and nursing, a worker should be excused from any employment that might endanger you or your child. The overall length of maternity leave should be at least 14 weeks. During maternity leave, a worker’s income should be at least two-thirds of his or her previous compensation. During pregnancy and maternity leave, a worker should be safeguarded from being fired or subjected to any other form of discrimination. After taking maternity leave, employees have the right to return to the same or a similar position. A worker must be offered compensated nursing breaks for breast-feeding the kid after childbirth and after resuming work.
Paternity
A male employee is entitled to four working days of paid absence from work every year for paternity leave. There is no extra remuneration other than the wage supplied by the company, however the business may opt to compensate the male employee in addition to the usual pay of the employee granted paternity leave.
Family
There is no statutory law that relates to any family paid time off.
National Holidays
Uganda has a total of 18 public holidays which are paid.
Other Paid Time Off
N / A
STATUTORY EMPLOYEE BENEFITS
Unemployment
Unemployment insurance and benefits are not covered by the law.
Workers Compensation
The Workers Compensation Act will apply to all jobs in Uganda.
This Act applies to employees employed by or under the Government of Uganda in the same way and to the same degree as if the employer were a private individual, but it does not apply to active personnel of Uganda’s military forces.
For the purposes of this Act, a worker’s monthly earnings shall be estimated in the manner best calculated to reflect the rate per month at which the worker was remunerated during the twelve months immediately before the accident, and yearly earnings shall be a multiple of twelve of that sum.
Social Security
According to the National Social Security Fund Act of 1985, a worker contributes 5% of his gross monthly wages, while an employer contributes 10% of a worker’s gross monthly earnings. The whole employer and employee payments, including interest, are paid in one single amount.
Retirement
The National Social Security Fund Act of 1985 provides for old age benefits for workers over the age of 55. At the age of 50, you can also apply for an early retirement bonus.
Health
Medical Aid is a private option and is based on an employee voluntary basis to sign up or for the employer to offer it.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
There is no private workers compensation yet in Uganda.
Retirement
There are private retirement/pension schemes available.
Health
Uganda’s health system is made up of public, private-not-for-profit (PNFP), and private-for-profit (PFP) providers, as well as practitioners of traditional and alternative medicine. Private providers are thought to play a significant role in health care delivery in Uganda, addressing a diverse client base.
Insurance
Private life insurance is available in Uganda.
PERSONAL INCOME TAX
Tax Year
Tax year runs from July 1st to June 30th.
Tax Tables
Uganda Tax Tables for Residents and Non-residents
For residents
Taxable Income | Rates of Taxes |
0 – 2820000 | 0% |
2820001- 4020000 | 10% |
4020001 – 4920000 | 20% |
4920001 – 120000000 | 30% |
120000001 + | 40% |
For non residents
Taxable Income | Rates of Taxes |
0 – 4020000 | 10% |
4020001 – 4920000 | 20% |
4920001 – 120000000 | 30% |
120000001 + | 40% |
Taxation Method
Residents are taxed on their worldwide income, whilst non-residents are solely taxed on their income earned in Uganda. Income tax is levied on three types of income: business income, employment income, and real estate income. The majority of taxes levied are self-assessed.
Double Taxation
Uganda has several double taxation agreements.
Residence Requirements
An individual is deemed a tax resident if he or she meets any of the following conditions:
- The individual has a permanent address in Uganda.
- The individual is in Uganda for 183 days or more in a 12-month period, either beginning or ending in an income year.
- The individual spends an average of 122 days or more in Uganda during the income year and the two prior income years.
- During the income year, the individual is employed overseas by the Ugandan government.
Payroll Calendars
Employees are not required to be paid on a set schedule.
Payrolls can be done weekly, biweekly, fortnightly, or monthly.
Rebates & Tax Credits
Individuals are entitled to a tax credit for any WHT incurred on different payments. However, because WHT is a final tax, no tax credit is available. If the tax withheld at any time exceeds the tax amount assessed, the surplus may be applied to any other tax liability or obtained as a refund from the authorities.
Individuals are eligible to tax credits for any provisional tax paid throughout the course of a fiscal year. An individual is entitled to a refund of this tax if the provisional tax paid exceeds the tax due for the year and there are no other liabilities against which the excess tax may be reduced.
A resident taxpayer is eligible to an overseas tax credit for any foreign income tax paid in respect of foreign-source income included in the taxpayer’s gross income. The permitted foreign tax credit is subject to Uganda’s income tax rate (i.e. 30%).
Health Insurance
There is limited information regarding a National Health Insurance Scheme as it is a work in progress. Members of Parliament enacted the National Health Insurance Scheme (NHIS) Bill on March 31, 2021, with the goal of providing universal healthcare to all Ugandans.
Unemployment
Unemployment insurance and benefits are not covered by the law.
Social Security
According to the National Social Security Fund Act of 1985, a worker contributes 5% of his gross monthly wages, while an employer contributes 10% of a worker’s gross monthly earnings. The whole employer and employee payments, including interest, are paid in one single amount.
PAYROLL ELEMENTS
Income
Payroll Elements in Uganda
Salary, earnings, bonuses, overtime pay, taxable benefits, allowances, and certain lump sum perks are examples of remuneration (revenue from employment). Profits or losses made by a company or trade. Income or profits derived from an individual’s status as a trust beneficiary.
Bonuses
Bonuses are added to an individual’s monthly income. Gratuities paid as a result of a termination, severance, settlement, or mutual agreement must be taxed at a rate determined by the authority in accordance with a tax directive.
Allowances
The first UGX 2,820,000 of a resident individual’s yearly income falls into the nil tax brackets and is tax-free. This is the amount that an individual can earn tax-free.
Benefits in Kind
Employees are taxed on in-kind benefits such as a car provided by their company. Benefits in kind are taxed at the sale rate or the actual cost of the benefit to the corporation, subject to a market value test.
Investment Income
Dividend and interest income is taxed at a rate of 15%.
Rental income: The tax rate for resident people is 30% of the chargeable income.
Non-residents are taxed at a rate of 15% on gross rental income.
Retirement Funding
The National Social Security Fund Act of 1985 provides for old age benefits for workers over the age of 55. At the age of 50, you can also apply for an early retirement bonus.
Health Insurance
There is limited information regarding a National Health Insurance Scheme as it is a work in progress. Members of Parliament enacted the National Health Insurance Scheme (NHIS) Bill on March 31, 2021, with the goal of providing universal healthcare to all Ugandans.
Risk Insurance
N / A
Taxable Income
Residents have a tax-free yearly income level of UGX. 2,820,000 per year. The remainder is taxed at a rate of 10%, 20%, or 30%, depending on the income level. Individuals earning more than UGX 120,000,000 per year must pay an extra 10% tax on their earnings.
Allowable Deductions
Any costs that are personal or domestic in nature are not deductible. These expenses include the costs of sustaining the individual’s family and housing, the costs of commuting to work, and the price of work apparel.
Tax breaks for businesses
Individuals are permitted by law to deduct the following amounts from their gross income when calculating their taxable income:
- All of a person’s expenditures and losses incurred during the income year to the extent that the expenditures and losses were incurred in the creation of the income that is included in gross income.
- Any loss experienced by the person while disposing of a business asset within the income year.
- When an individual earns rental income, a sum equivalent to 75% of the rental revenue is permitted as expenditure and losses incurred in producing that income. In addition, an individual may deduct the interest paid on a mortgage obtained from a financial institution for the purpose of acquiring or constructing property that generates rental income.
- Interest paid on a mortgage obtained from a financial institution in order to buy or build premises producing rental revenue.
- An individual pays local service tax.
- Any business-related expenditure or loss that is recoverable under any kind of insurance or contract is not deductible.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
Employers must pay payroll taxes at a rate of 3% of the taxable gross compensation.
Unemployment
Unemployment insurance and benefits are not covered by the law.
Social Security
According to the National Social Security Fund Act of 1985, a worker contributes 5% of his gross monthly wages, while an employer contributes 10% of a worker’s gross monthly earnings. The whole employer and employee payments, including interest, are paid in one single amount.
Workers Compensation
The Workers Compensation Act will apply to all jobs in Uganda.
This Act applies to employees employed by or under the Government of Uganda in the same way and to the same degree as if the employer were a private individual, but it does not apply to active personnel of Uganda’s military forces.
For the purposes of this Act, a worker’s monthly earnings shall be estimated in the manner best calculated to reflect the rate per month at which the worker was remunerated during the twelve months immediately before the accident, and yearly earnings shall be a multiple of twelve of that sum.
ADMINISTRATION
Income
Monthly pay-as-you-earn (PAYE) returns must be filed by employers within 15 days after the end of the month.
Payroll Taxes
Employers must pay payroll taxes at a rate of 3% of the taxable gross compensation.
Unemployment
Unemployment insurance and benefits are not covered by the law.
Social Security
According to the National Social Security Fund Act of 1985, a worker contributes 5% of his gross monthly wages, while an employer contributes 10% of a worker’s gross monthly earnings. The whole employer and employee payments, including interest, are paid in one single amount.
Workers Compensation
The Workers Compensation Act will apply to all jobs in Uganda.
This Act applies to employees employed by or under the Government of Uganda in the same way and to the same degree as if the employer were a private individual, but it does not apply to active personnel of Uganda’s military forces.
For the purposes of this Act, a worker’s monthly earnings shall be estimated in the manner best calculated to reflect the rate per month at which the worker was remunerated during the twelve months immediately before the accident, and yearly earnings shall be a multiple of twelve of that sum.
Statutory Benefits
The first stage in developing your Uganda benefits management strategy is to include statutory benefits that are required by law. Employees, for example, should be entitled to seven days of annual leave for every four consecutive months worked in a calendar year. They should also be given time off for national holidays. Maternity leave is 60 days of paid leave at full pay. Four of those weeks should follow births or a miscarriage. Following the birth of a child or a miscarriage, male employees should be entitled to four working days of paid paternity leave. After working one full month, all workers are entitled to at least one month of paid sick leave.
Employee Benefits
Many benefits are likely to be included in an Uganda benefits management plan, but it is recommended starting with those that are legally guaranteed. For example, the country observes 18 national holidays, and employees should be entitled to paid time off on those holidays. In most cases, all employees are entitled to 21 days of paid yearly leave. In Uganda, most female employees are entitled to 12 weeks of paid maternity leave and male employees are entitled to 4 days of paternity leave.
LEGISLATION
Employment Act
Labour Unions Act
STATUTORY BODIES
Uganda Revenue Authority (URA)
Judicial Service Commission (JSC)
