Here is how Pay As You Earn is taxed by URA
SIR— This is a response to Mr. Robert Nampa’s letter entitled, “Explain PAYE tax†in the press on September 26.
SIR— This is a response to Mr. Robert Nampa’s letter entitled, “Explain PAYE tax†in the press on September 26.
Employment income of a resident employee as defined under Section 19 of the Income Tax Act is as follows:
lWhere the monthly income does not exceed sh130,000, no tax is paid.
l Where the monthly income exceeds sh130,000 but does not exceed sh235,000, the tax is 10% of the amount by which monthly income exceeds sh130,000.
l Where the monthly income exceeds sh235,000 but does not exceed sh410,000, the tax is sh10,500 plus 20% of the amount by which monthly income exceeds sh235,000.
l Where the total income exceeds sh410,000, the tax is sh45,500 plus 30% of the amount by which the monthly income exceeds sh410,000.
PAYE is assessed and deducted by the employer from the monthly income of the employee according to these rates. The employer remits the tax to URA by the 15th of the following month. Part-time allowances or income from a secondary source is taxed at a flat rate of 30% under the PAYE Regulations of the Act.
The taxpayer is allowed to disclose voluntarily all sources of income for a given year of income.
He or she also discloses any income tax (including PAYE tax) paid to be offset against the total tax. Failure by the employer to deduct and remit the tax in time, it attracts a fine.
Kaweesa Kiwanuka
Tax Education-URA
Employment income of a resident employee as defined under Section 19 of the Income Tax Act is as follows:
lWhere the monthly income does not exceed sh130,000, no tax is paid.
l Where the monthly income exceeds sh130,000 but does not exceed sh235,000, the tax is 10% of the amount by which monthly income exceeds sh130,000.
l Where the monthly income exceeds sh235,000 but does not exceed sh410,000, the tax is sh10,500 plus 20% of the amount by which monthly income exceeds sh235,000.
l Where the total income exceeds sh410,000, the tax is sh45,500 plus 30% of the amount by which the monthly income exceeds sh410,000.
PAYE is assessed and deducted by the employer from the monthly income of the employee according to these rates. The employer remits the tax to URA by the 15th of the following month. Part-time allowances or income from a secondary source is taxed at a flat rate of 30% under the PAYE Regulations of the Act.
The taxpayer is allowed to disclose voluntarily all sources of income for a given year of income.
He or she also discloses any income tax (including PAYE tax) paid to be offset against the total tax. Failure by the employer to deduct and remit the tax in time, it attracts a fine.
Kaweesa Kiwanuka
Tax Education-URA