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PAYE penalties in Uganda

Question:
What are the penalties regarding non compliance to withholding Pay As You Earn (PAYE)?

Answer:
A withholding agent who fails to withhold tax in accordance with the Income Tax Act Cap 340 is personally liable to pay to the Commissioner the amount of tax which has not been
withheld, but the withholding agent is entitled to recover this amount from the payee.

Any person who fails to comply with withholding PAYE is liable for interest at a rate equal to 2 percent per month on the amount unpaid calculated from the date on which the payment was due until the date on which payment is made.
i.e. 2% x (tax) x no. of months

For example if PAYE charged on gross income is Ug shs 100,000 and the withholding agent fails to comply for 5 months, the penalty charge is:

2/100 x 100,000 x 5 = 10,000

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