Withholding tax is deducted at source by a withholding agent and remitted to the Uganda Revenue Authority (URA). This guide covers every withholding tax category in Uganda, the rates, the deadlines and the amendments effective from 1 July 2026.
The Income Tax Act, Cap. 338, formerly Cap. 340, specifies the persons required to withhold tax and the payments from which tax must be deducted. The obligation depends on the nature of the transaction, the status of the payer and the recipient, and any applicable exemption.
Withholding tax is deducted at source by a withholding agent when making a payment to another person and is remitted to the Uganda Revenue Authority (URA). The withholding agent is the person legally obliged to deduct the tax, while the recipient of the payment is the payee. This guide incorporates the relevant amendments effective from 1 July 2026.
Employment income
Under section 126, an employer deducts tax from each liable employee's taxable employment income through the Pay As You Earn (PAYE) system. Taxable employment income includes salary and other taxable allowances and benefits.
From 1 July 2026, the monthly PAYE rates for resident individuals are:
Monthly chargeable income (UGX)PAYE payableNot exceeding 335,000NilAbove 335,000 but not exceeding 410,00020% of the amount exceeding 335,000Above 410,000 but not exceeding 485,00015,000 plus 25% of the amount exceeding 410,000Above 485,000 but not exceeding 10,000,00033,750 plus 30% of the amount exceeding 485,000Above 10,000,00033,750 plus 30% of the amount exceeding 485,000, plus an additional 10% of the amount exceeding 10,000,000
Non-resident employees are subject to a separate rate schedule and do not qualify for the resident tax-free threshold.
Payments of management and professional fees
Under section 129, a resident person paying management or professional fees to another resident person must generally withhold 6% of the gross fee. The provision also covers agency fees in the case of Islamic financial business.
The UGX 1,000,000 threshold for general supplies does not apply to this category. An exemption may apply where the Commissioner General is satisfied that the recipient has regularly complied with their obligations under the Act. The payer should verify the recipient's applicable exemption status.
Payments that constitute employment income are dealt with under PAYE.
Withholding tax on payments to foreign entertainers and sports persons
Under section 83, a non-resident entertainer, sports person, or theatrical, musical or other group of non-resident entertainers or sports persons deriving income from a performance in Uganda is generally taxed at 15% of the gross remuneration or receipts.
Under section 137(2), the promoter, agent or similar person paying the remuneration or collecting the group's receipts must withhold the tax. It is a final tax under section 87, subject to any applicable treaty relief. Members of a performing group are jointly and severally liable.
The tax must be remitted within five days of the performance or by the day before the non-resident leaves Uganda, whichever is earlier.
Withholding tax on payments to resident public entertainers
The 2026 amendment introduced section 135B and a 6% withholding tax on gross payments to public entertainers. URA's guidance applies this rate to resident public entertainers.
The definition extends to entertainment or artistic performances in public or before a camera or microphone, including stage, radio, television and digital performances.
This withholding is generally an advance income tax credit for the resident entertainer. The existing 15% rule for qualifying non-resident performances under section 83 continues to apply.
Withholding tax on interest
Under section 127, a resident person paying interest to another resident person generally withholds 15% of the gross interest.
The section does not apply to interest paid by a natural person, interest other than government-security interest paid to a financial institution, interest paid by a company to an associated company as defined in the Act, or interest exempt from tax in the recipient's hands.
Interest on government securities is subject to special withholding rates of 20% or 10%, depending on maturity. The 10% rate applies to securities with a maturity of at least ten years.
Interest withholding by a financial institution on interest paid to a resident individual in their own capacity is generally final tax. Withholding on interest on treasury bills and other government securities paid by the Bank of Uganda is also final tax.
Payments to non-resident contractors or professionals
Under section 84, income derived by a non-resident person under a Ugandan-source services contract is generally taxed at 15% of the gross payment. The payer must withhold the tax under section 137.
A Ugandan-source services contract is a contract, other than an employment contract, whose principal purpose is the performance of services giving rise to income sourced in Uganda. Any goods supplied under it must be incidental to that purpose.
Royalties and management charges taxed under section 82 are dealt with under that section. Income attributable to the non-resident's permanent establishment in Uganda is excluded from section 84 and falls under the applicable ordinary income tax rules. An applicable double taxation agreement may also affect the treatment.
Payments of dividends
Under section 128, a resident company paying a dividend to a resident shareholder generally withholds 15% of the gross dividend, unless the dividend is exempt in the shareholder's hands.
The 10% rate for dividends from a company listed on the stock exchange applies to resident individual shareholders. It does not apply automatically to every resident shareholder; resident corporate shareholders generally remain subject to 15%, unless an exemption applies.
Dividend withholding is final tax for a resident individual. For other resident shareholders, it is generally creditable, subject to the applicable rules.
Payments for goods and services
Under section 136(1), the Government of Uganda, government institutions, local authorities, government-controlled companies and persons designated by the Minister must withhold 6% when paying amounts in aggregate exceeding UGX 1,000,000 for goods, materials or services supplied by a person in Uganda.
This obligation does not automatically apply to every purchaser merely because the purchase exceeds UGX 1,000,000. Where the threshold is exceeded, tax applies to the full qualifying payment. Supplies that would ordinarily constitute one supply exceeding the threshold cannot avoid withholding by being split into smaller transactions.
URA confirms that, where an invoice includes VAT, income tax withholding is calculated on the amount exclusive of VAT.
Section 136 exemptions include agricultural supplies and qualifying exempt suppliers or importers, including persons whose compliance-based withholding exemption has been approved by the Commissioner General.
International payments
Under section 82, a non-resident person deriving Uganda-source dividends, interest, royalties, rent, natural resource payments, management charges or agency fees in the case of Islamic financial business is generally subject to 15% tax on the gross amount. The payer withholds under section 137.
The rate and treatment may be affected by a statutory exemption, a special rate, an applicable double taxation agreement or attribution of the income to a permanent establishment in Uganda.
From 1 July 2026, software is expressly included in the definition of royalty. Payments for software must therefore be assessed under the royalty provisions where they meet that definition. The amendment also excludes royalty income from digital services tax under section 86(7).
Interest on qualifying foreign debentures
The amended section 82(5) replaces the previous exemption with 5% withholding tax on qualifying interest paid by a resident company in respect of debentures.
The conditions are that the debentures were issued outside Uganda to raise a loan outside Uganda; they were widely issued to raise funds for the company's business in Uganda, or the interest is paid to a bank or financial institution of a public character; and the interest is paid outside Uganda.
The 5% rate does not apply automatically to every foreign loan.
Payments on imports
Under section 136(3), a person importing goods into Uganda generally pays 6% withholding tax on the customs value of the goods at importation. The value is determined under customs law.
Exceptions under section 136(5) include qualifying importations by exempt organisations, agricultural supplies, and importers exempt from income tax or covered by an approved compliance-based withholding exemption. Import withholding tax is generally an advance income tax credit.
Withholding tax on commissions to insurance and advertising agents
Under section 134, an insurance service provider paying commission to an insurance agent withholds 10% of the gross commission. Following the 2026 amendment to section 139, this withholding is final tax.
Under section 135, a person paying commission to an advertising agent also withholds 10% of the gross commission. Advertising-agent withholding is generally an advance income tax credit.
Gaming and betting winnings
Under the amended section 131, a person paying betting or gaming winnings must withhold 15% of the winnings.
From 1 July 2026, winnings mean the payout less the amount staked. The tax is therefore calculated on the winnings, rather than the entire payout. For example, where a player stakes UGX 20,000 and receives a payout of UGX 100,000, the winnings are UGX 80,000 and withholding tax is UGX 12,000.
Section 131 excludes winnings paid by a person licensed to conduct a national lottery under section 23 of the Lotteries and Gaming Act, and winnings derived from licensed land-based casinos.
Commission paid by telecommunications service providers
Under the amended section 133, a telecommunications service provider paying commission for telecommunication retail services, mobile network services or provision of mobile money services must withhold 10% of the gross commission.
Under section 139, this withholding is final tax where the recipient is a resident individual. That final-tax treatment does not automatically extend to corporate recipients.
Other withholding taxes to consider
A resident purchaser of an asset from a non-resident generally withholds 10% of the gross payment under section 130(1). A resident purchaser of a business or business asset under section 130(2) generally withholds 6%, subject to the applicable transaction classification.
Commission paid to a payment service provider, including banking agents and other agents offering financial services, is subject to 10% withholding tax.
Under section 132, a resident person paying reinsurance or re-takaful premiums to a non-resident generally withholds 10%, subject to the statutory exceptions for specified reinsurers.
Summary of withholding tax rates in Uganda
Taxpayer / recipientDescriptionWithholding agent / collection pointTax rateEmployeeTaxable employment incomeEmployerApplicable PAYE ratesResident management or professional-fee recipientManagement, professional and qualifying Islamic-finance agency feesResident payer6%Non-resident entertainer, sports person or performing groupIncome from a performance in UgandaPromoter, agent or similar person15%Resident public entertainerGross entertainment paymentPerson making payment6%Resident interest recipientOrdinary taxable interestResident payer, subject to exceptions15%Government-security investorInterest; 10% applies where maturity is at least ten yearsBank of Uganda / relevant payer20% / 10%Non-resident contractor or professionalUgandan-source services contractPerson making paymentGenerally 15%Resident shareholderDividend, unless exemptResident companyGenerally 15%Resident individual shareholder in a listed companyDividend from a listed companyListed resident company10%Supplier in UgandaQualifying goods or services exceeding UGX 1,000,000 in aggregateGovernment bodies and designated payers6%Non-resident recipientUganda-source dividends, ordinary interest, royalties, rent and other section 82 paymentsPerson making paymentGenerally 15%Qualifying foreign debenture-interest recipientInterest satisfying section 82(5) conditionsResident company5%ImporterCustoms value of imported goods, unless exemptCollected at importation through Customs6%Insurance agentGross commissionInsurance service provider10%Advertising agentGross commissionPerson paying commission10%Betting or gaming winnerPayout less stake, subject to exclusionsPerson paying winnings15%Telecom or mobile-money commission recipientQualifying commissionTelecommunications service provider10%Payment service provider / banking agentCommissionPerson paying commission10%Non-resident asset sellerAsset purchased by a resident personResident purchaser10%Business / business-asset sellerPurchase falling under section 130(2)Resident purchaser6%Non-resident reinsurerReinsurance or re-takaful premium, subject to exceptionsResident payer10%
The rates above remain subject to the exemptions, special rules and treaty provisions applicable to each payment.
Filing, payment and tax credits
Withholding tax returns and the related payment are generally due within fifteen days after the end of the month in which the payment was made, usually by the 15th of the following month. Non-resident entertainers and sports persons have the earlier payment deadline explained above.
Withholding agents must provide the required tax credit certificates and retain records of payments and tax withheld for five years after the end of the relevant year of income.
Creditable withholding is an advance payment against the recipient's assessed income tax. Final withholding settles the tax liability on that particular income. A withholding exemption from deduction at source does not, by itself, make the recipient's income exempt from income tax.
A withholding agent who fails to deduct the required tax is personally liable for the amount that should have been withheld. Late payment or filing may also attract interest or penalties under the applicable tax laws.
Legal references and source notes
1. Income Tax Act, Cap. 338: sections 82-84, 87-88 and 125-146, and Schedule 4, read with subsequent amendments.
2. Income Tax (Amendment) Act, 2026: changes to sections 82(5), 131, 133 and 139; insertion of section 135B; software royalty and digital-services provisions; and amendments to Schedule 4.
3. URA guidance: effective date of the 2026 amendments; revised PAYE rates and return amendments; withholding tax guidance; and withholding tax calculation on VAT-inclusive invoices.
Source: "Withholding Tax in Uganda - A Comprehensive Guide" by CPA Innocent Mugisha, Harvest Training and Consultancy (harvestuganda.net). Originally published 10 April 2024; updated 3 October 2026 for FY 2026/2027.
