Local Service Tax (Assessment & Payment)

What is local Service tax?

This is a tax levied on wealth and incomes of all persons in gainful employment, self-employed and practicing professionals, self-employed artisans, businessmen/women and commercial farmers.

Who is eligible to pay?

  • Persons in gainful employment earning a monthly take home salary exceeding Ug shs 100,000.
  • Self-employed and practicing professionals who include medical and veterinary doctors, engineers, accountants, consultants, technicians, lawyers, dentists, pharmacists, architects, scientists, surveyors, valuers, ICT specialists etc.
  • Self-employed artisans who include craftsmen, plumbers, builders, electricians, masons, carpenters, mechanics, blacksmiths, painters, welders, bakers, furniture makers, florists, skilled artisans and any other artisans not mentioned excluding sole petty artisans and juakalis, who are not fully established and not business entities.
  • Businessmen and businesswomen who include owners of shops, fuel stations, restaurants, bars, furniture workshops, directors and shareholders of business companies, printer workshops, food vendors, commission agents, insurance brokers, butchers, real  estate’s service providers, owners of road construction firms, outside catering service providers, coffee millers, maize millers, fish mongers, timber merchants, garage owners and shoe makers and any other businessmen and business women not mentioned.
  • Commercial farmers

Computation

  1. Professionals
Professionals Monthly income earned Annual LST Payable
Doctors, Pharmacists, veterinary doctors, engineers, accountants, auditors, Consultants, Lawyers, architects, artists, journalists, writers, surveyors, planners, scientists, etc 1,000,000 on wards 100,000
Photographers, counselors, dramatists, actors, sportspersons, programmers and any other professional not mentioned Exceeding 500,000 but not exceeding 900,000 50,000
  • Persons in gainful employment and earning a take home salary
Amount of monthly income earned (in Shs) Rate of LST (in Shs) per year
Exceeding 100,000 but not exceeding 200,000 5,000
Exceeding 200,000 but not exceeding 300,000 10,000
Exceeding 300,000 but not exceeding  400,000 20,000
Exceeding 400,000 but not exceeding 500,000 30,000
Exceeding 500,000 but not exceeding 600,000 40,000
Exceeding 600,000 but not exceeding 700,000 60,000
Exceeding 700,000 but not exceeding 800,000 70,000
Exceeding 800,000 but not exceeding 900,000 80,000
Exceeding 900,000 but not exceeding 1,000,000 90,000
Exceeding 1,000,000 100,000

Note: “take home salary’’ means gross salary after deducting income tax in the form of Pay as You Earn (PAYE)

  • Artisans
Artisans Monthly income earned (Shs) Annual LST Payable (Shs)
Crafts persons, plumbers, builders, electricians, mechanics, black smith Exceeding 100,000 but not exceeding 200,000 5,000
Painters, welders, bakers, furniture makers, florists, tailors, radio & TV repairers Exceeding 200,000 but not exceeding 300,000 10,000
Hair dressers, semi-skilled artisans and any other not mentioned 300,0000 on wards 20,000
  • LST for Businessmen/Women
Business monthly Turnover (in Shs) LST per Year (in Shs)
500,000 but not exceeding 1,000,000 5,000
Exceeding 1,000,000 but not exceeding 2,000,000 10,000
 Exceeding 2,000,000 but not exceeding  3,000,000 20,000
Exceeding 3,000,000 but not exceeding 4,000,000 30,000
Exceeding 4,000,000 but not exceeding 5,000,000 40,000
Exceeding 5,000,000 but not exceeding 6,000,000 50,000
Exceeding 6,000,000 but not exceeding 7,000,000 60,000
Exceeding 7,000,000 but not exceeding 8,000,000 70,000
 Exceeding 8,000,000 but not exceeding 9,000,000 80,000
  Exceeding 9,000,000 but not exceeding 10,000,000 90,000
  Exceeding 10,000,000 100,000

How to pay

  1. Employees earning a salary or wage: Under this category, the employer will submit a salary schedule with the respective local service tax computation therein to the Municipal Council for assessment on IRAS.
  2. Professionals, artisans, businessmen/ women
  3. Assessment is done on IRAS alongside trading license or by separate assessment by authorized officials of the Municipal Council

NOTE: Payment can be made by way of electronic funds transfer (EFT) or Bank drafts, or by Bank payment Advise Forms (BPAFs) after acquiring an assessment on IRAS from the revenue office at the nearest division office which will provide a PRN that is quoted while making the payment.

Effective date for payment of LST

  • In the first four months of every Financial Year for employees earning a salary or wage
  • Once in a financial year for professionals, Artisans within the first four months
  • Once in a calendar year for Businessmen/ women before being issued a trading license.

What if I do not pay?

  • A surcharge of 50% shall be levied on the expected Local service Tax after it is due
  • On conviction in the courts of law, the defaulter will serve a term not exceeding one month imprisonment or be required to pay a fine not exceeding double the amount due.

Who is exempted from paying LST?

  • Members of the Uganda People’s Defense Forces
  • Members of the Uganda Police force
  • Members of the Uganda Prisons Service
  • Members of the Local Defense Forces sometimes referred to as the LDUs
  • Members of the Diplomatic missions accredited to Uganda
  • Unemployed persons and peasants
  • A person engaged in subsistence or occasional economic activities
  • Petty food vendors
  • Boarder-Boarder (BodaBoda) cyclists.
  • Sole petty artisans and juakalis, who are not fully established and are not business entities
  • People living in poverty who are unable to earn a minimum income to access basic necessities of life.

NB: “peasants’’ including people who produce for their own subsistence and have nothing or very little to sell to the market.

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