Uganda’s Local Service Tax (LST) is a critical revenue tool for local governments, enabling them to fund public services and infrastructure. Introduced under the Local Governments (Amendment) (No. 2) Act of 2008, the LST targets individuals and businesses based on income, profession, or turnover. This article breaks down key aspects of the tax, including eligibility, rates, compliance, and consequences of non-payment, while highlighting the role of firms like CTT (Continental Tax Trade) in ensuring seamless compliance.


Who Must Pay the Local Service Tax?
The LST applies to:

Salaried employees (excluding police, military, diplomats, and low-income earners).
Self-employed professionals (e.g., doctors, lawyers, engineers).
Business owners and commercial farmers with significant turnover.
Exemptions: Members of Uganda’s security forces, diplomats, unemployed individuals, and those unable to meet basic needs are exempt.


Key Deadlines and Payment Process
Deadline: LST must be paid by November 15th each financial year (July 1–June 30).
Payment Options:

Salaried employees: Employers deduct LST in 4 installments (or as a lump sum).
Businesses and professionals: Pay annually when renewing trade licenses.
Registration: Taxpayers must register with their local government office where they reside for at least 6 months.

Tax Rates by Category
1. Professionals
Monthly Income (UGX)
Annual LST (UGX)
Over 1,000,000
100,000
500,000 – 900,000
50,000
Example: A lawyer earning 1,200,000 UGX monthly pays 100,000 UGX annually.

2. Salaried Employees
Monthly Take-Home Pay (UGX)
Annual LST (UGX)
100,000 – 200,000
5,000
200,000 – 300,000
10,000
... (incremental tiers) ...

Over 1,000,000
100,000
Example: An employee earning 450,000 UGX monthly pays 30,000 UGX yearly.

3. Businesses
Monthly Turnover (UGX)
Annual LST (UGX)
500,000 – 1,000,000
5,000
1,000,000 – 2,000,000
10,000
... (incremental tiers) ...
...
Over 10,000,000
100,000
Example: A retailer with 6,500,000 UGX monthly turnover pays 60,000 UGX annually.


Consequences of Non-Compliance
Late Payment: A 50% surcharge on overdue amounts.
Legal Penalties: Fines up to double the tax owed and/or 1-month imprisonment.

Why Compliance Matters
Timely LST payments avoid penalties and support local development. Proper documentation (e.g., assessment records) is crucial for audits. Businesses must also stay compliant with customs duty regulations and other local tax obligations to avoid cross-agency penalties.


Seeking Professional Assistance?
CTT (Continental Tax Trade) specializes in accounting, local tax compliance, and customs duty tax services across Uganda and East Africa. Their expertise ensures businesses and professionals meet regulatory requirements while optimizing tax efficiency.