This is Income tax charged on profits of a company and charged on a companies’ taxable income. The income tax rate applicable to companies is 30%,
Pay As You Earn (PAYE)
Any employee who is employed by a construction company is required to obtain a TIN, and the employer (Company) has a duty to register for Pay As You Earn (PAYE), in order to withhold from each employee who earns a monthly salary in excess of 235,000/= and remits it to URA.
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Withholding tax (WHT) is income tax that is withheld at source by one person (Designated withholding agent) upon making payment to another person (payee). The rate applicable to goods and services is 6% and should be withheld once the transaction amount exceeds 1,000,000/= and later remitted to URA.
With the exception of Professional fees, that do not have any threshold, i.e. withholding of 6% happens, irrespective of the transaction value.
Please note: The tax withheld is credited/ reduced on the tax payable in the Payee’s final income tax return, once filed.
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Value Added Tax
VAT is a consumption tax charged at a rate of 18% on all taxable supplies made by taxable persons i.e. persons registered or required to register for VAT purposes. The threshold for VAT registration is an annual turnover exceeding 150 million UGX or 37.5 million UGX for 3 consecutive months.
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Please note: It is mandatory for all VAT registered taxpayers to issue e-invoices as no tax credit will be allowed or claimable on purchases/ expenses, unless they are supported by e-invoices.
Click here for information on how to register for EFRIS