Payroll Services in Uganda
Fully managed Ugandan payroll: PAYE on the new 2026/27 bands, 15% NSSF and Local Service Tax calculated on every payslip, returns filed with URA by the 15th and every payment made on time, with a named specialist a phone call away.
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What payroll in Uganda actually involves
Payroll in Uganda combines PAYE, a 15% NSSF contribution with no ceiling and an annual Local Service Tax collected through payroll. PAYE and NSSF are due within 15 days after the end of each month, and the PAYE bands changed with effect from 1 July 2026.
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Calculate Your Employee Costs in Uganda
Enter a gross annual salary to see the employer’s statutory cost for a Ugandan employee in 2026/27: 10% NSSF on total wages, with no ceiling. The employee’s 5% NSSF, PAYE and Local Service Tax are withheld from salary.
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*Indicative figures only and not definitive legal advice. Local regulations change frequently. Consult an expertUganda
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Employer Costs in Uganda Explained
A Ugandan employee costs 10% on top of gross salary in NSSF at every pay level, because the contribution has no ceiling. PAYE, the employee’s 5% NSSF and Local Service Tax come out of the employee’s pay, so they change net pay, not the employer’s cost. Here’s the breakdown.
The National Social Security Fund takes 15% of each employee’s total wages every month: 10% from the employer and 5% deducted from the employee. Wages means all cash pay before deductions, allowances included, and there is no ceiling. Since the NSSF (Amendment) Act 2022, every employer must register and contribute, whatever its number of employees.
Contributions are due within 15 days after the end of the month. Late contributions attract a 10% penalty, and a further 10% of the original amount is added for each month they remain unpaid.
From 1 July 2026, resident employees pay no PAYE on the first UGX 335,000 of monthly chargeable income. The next UGX 75,000 is taxed at 20%, the following UGX 75,000 at 25% and income above UGX 485,000 at 30%, with an extra 10% on income above UGX 10 million a month. The new bands come from the Income Tax (Amendment) Act 2026, assented to on 20 August 2026 and backdated to 1 July.
Because the Act arrived after the July and August payrolls had run, the Uganda Revenue Authority asked employers to amend those PAYE returns and refund the over-withheld tax to employees, which can be done through a later payroll. For pay above UGX 485,000 a month the difference is UGX 13,750 a month. The employee’s NSSF contribution is not deductible for PAYE; Local Service Tax is.
Local Service Tax is an annual tax on employees earning more than UGX 100,000 a month, set by monthly income band: UGX 5,000 a year on UGX 100,001 to 200,000, rising in steps to UGX 100,000 a year on pay above UGX 1 million. Employers deduct it from pay in the first four months of the financial year, July to October, and pay it to the local government, which in Kampala is the Kampala Capital City Authority.
Late payment carries a 50% surcharge. Local Service Tax paid by the employee reduces chargeable income for PAYE, so net pay in July to October differs slightly from the rest of the year.
For an employee earning UGX 3,000,000 gross a month, the employer pays UGX 300,000 to NSSF, a total cost of UGX 3,300,000 a month, 10% on top of salary. In a month without Local Service Tax, the employee pays UGX 150,000 in NSSF and UGX 788,250 in PAYE, and takes home UGX 2,061,750.
Uganda’s only general minimum wage order dates from 1984 and has not been updated, so pay is set by contract and, in some sectors, by collective agreement. Monthly-paid staff are paid at the end of each month, and final pay is due within seven days of the end of employment.
After six months of continuous service, employees earn seven days of paid annual leave for every four months worked, 21 days a year. Maternity leave is 60 working days on full pay, at least four weeks of it after the birth, and paternity leave four working days. Notice is two weeks after six months of service, one month after a year, two months after five years and three months after ten. Today, sick pay covers the first month of absence on full wages.
The Employment (Amendment) Act 2025 was assented to on 29 April 2026 and starts on a date the labour minister sets by statutory instrument; none had been published by October 2026. Once in force, sick pay becomes two months on full pay and four on half pay, ending probation requires a month’s notice or pay instead of seven days’ wages, severance is fixed at one month’s salary for each completed year of service and planned redundancies must be notified to the Labour Commissioner 30 days in advance.
Ugandan payroll contributions and taxes, 2026/27
| Item | Employer | Employee | Applies to |
|---|---|---|---|
| NSSF | 10% | 5% | Total wages, no ceiling |
| PAYE | — | Nil to 30%, plus 10% above UGX 10 million a month | Monthly chargeable income, bands in force from 1 July 2026 |
| Local Service Tax | — | UGX 5,000 to 100,000 a year | Monthly income above UGX 100,000, deducted July to October |
| Payment deadline | 15th of the next month | — | PAYE return and payment, NSSF contributions |
| Late payment | PAYE: 2% interest a month; NSSF: 10% penalty a month | — | On the unpaid amount |
| Minimum wage | Not updated since 1984 | — | Pay set by contract or collective agreement |
Ugandan PAYE bands for residents, from 1 July 2026
| Monthly chargeable income | PAYE |
|---|---|
| Up to UGX 335,000 | Nil |
| UGX 335,001 to 410,000 | 20% of the amount above UGX 335,000 |
| UGX 410,001 to 485,000 | UGX 15,000 plus 25% of the amount above UGX 410,000 |
| UGX 485,001 to 10,000,000 | UGX 33,750 plus 30% of the amount above UGX 485,000 |
| Above UGX 10,000,000 | As above, plus 10% of the amount above UGX 10,000,000 |
Gross to net and employer cost in Uganda, 2026/27
| Monthly gross | Employee NSSF | PAYE | Net pay | Employer NSSF | Total monthly cost |
|---|---|---|---|---|---|
| UGX 1,000,000 | UGX 50,000 | UGX 188,250 | UGX 761,750 | UGX 100,000 | UGX 1,100,000 |
| UGX 3,000,000 | UGX 150,000 | UGX 788,250 | UGX 2,061,750 | UGX 300,000 | UGX 3,300,000 |
| UGX 15,000,000 | UGX 750,000 | UGX 4,888,250 | UGX 9,361,750 | UGX 1,500,000 | UGX 16,500,000 |
The gross-to-net table is for a resident employee in a month outside July to October, when no Local Service Tax is deducted, with no other deductions. The employee’s NSSF does not reduce chargeable income for PAYE. These are TopSource calculations from the verified 2026/27 rates.
Rates, bands and amounts shown are for the 2026/27 financial year and were verified on 7 October 2026 against the Income Tax Act, the Uganda Revenue Authority notice on the Income Tax (Amendment) Act 2026, the National Social Security Fund Act, Kampala Capital City Authority guidance on Local Service Tax and the Employment Act. This page is general information, not tax or legal advice.
How our Ugandan payroll service works
Why Choose TopSource for Global Payroll in Uganda
TopSource for payroll, Employer of Record or any other of our services represents a simpler, more reliable and transparent option.
We don’t hide fees or sneak price increases. We run Ugandan payroll in-house and file under your own URA and NSSF registrations rather than a bureau’s, so the same team that files your PAYE returns answers your calls. You get a named account manager, one consolidated monthly invoice covering salaries, contributions, taxes and fees, and one live Portico view of Uganda beside every other country we run for you. Portico syncs with your time-tracking, leave and HR systems via API – set up by our onboarding team, not left to yours. GDPR, SOC 2 and ISO 27001 certified.
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Ugandan payroll FAQs
From 1 July 2026, residents pay nil on the first UGX 335,000 of monthly chargeable income, 20% on the next UGX 75,000, 25% on the next UGX 75,000 and 30% above UGX 485,000, plus 10% on income above UGX 10 million. The threshold was UGX 235,000 before the Income Tax (Amendment) Act 2026.
Yes. The Act was assented to on 20 August 2026 with effect from 1 July, so URA asked employers who filed July or August returns on the old bands to amend them and refund the over-withheld tax to employees, which can be done through a later payroll.
15% of total monthly wages: 10% paid by the employer and 5% deducted from the employee, with no ceiling. Every employer must register and contribute, whatever its size, within 15 days after the end of the month.
The statutory employer cost is the 10% NSSF contribution, with no ceiling: an employee on UGX 3,000,000 a month costs UGX 3,300,000. Tell us the role and salary and we’ll send the full cost within one business day.
An annual local government tax on employees earning more than UGX 100,000 a month, from UGX 5,000 to UGX 100,000 a year depending on monthly income. Employers deduct it from pay between July and October and pay it to the local government.
Both are due within 15 days after the end of the month. Unpaid PAYE carries interest of 2% a month, and late NSSF contributions a 10% penalty that is added again for each month they stay unpaid.
Uganda’s only general minimum wage order dates from 1984 and has not been updated, so pay is set by contract and, in some sectors, by collective agreement.
Once the labour minister sets its start date, sick pay becomes two months on full pay and four on half pay, severance is fixed at one month’s salary per completed year of service and redundancies need 30 days’ notice to the Labour Commissioner. It was assented to on 29 April 2026.
Seven days of paid annual leave for every four months of continuous service, 21 days a year, once they have six months of service. Maternity leave is 60 working days on full pay and paternity leave four working days.
Registering as an employer with URA and NSSF generally requires a local presence, such as a Ugandan subsidiary or a registered branch. Without one, the usual route is an Employer of Record. TopSource can run payroll for your Ugandan entity or employ your team through our Employer of Record service.
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