John Musinguzi, the URA Commissioner General
Uganda Revenue Authority (URA) has explained 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 the known 30%.
The clarification was made by John Musinguzi, the URA Commissioner General while appearing before Parliament’s Trade Committee that was scrutinizing petition from traders over the regressive tax regime that has reportedly 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 the moment you increase PAYE, people will under declare,” 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 month of September 2022 and subsequent months, taxpayers are advised to download the new enhanced return templates from URA.
According to URA, in 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 said 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 they 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 limiting 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. 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.
Seriously people are not fair , how about people who ar earning little, how are they going to survive