Local Service Tax is governed by the Local Government (Amendment) No.2 Act 2008-“An act to amend the local Governments Act to provide for additional taxes to be levied, collected and charged by local governments in order to provide new sources of revenue for local Governments and for related purposes”. Reference can also be made to practical guide for implementation of Local Hotel and Local Service tax developed by Local Government

This is a tax levied on salaries, wages and incomes of all persons in gainful employment and its purpose is to raise additional revenue service delivery in Nansana Municipality.

It’s a Legal requirement for any person in gainful employment/business to pay Local Service Tax as provided for by the Act CAP 243. The proceeds are to enable and finance provision of services such as maintenance of roads and drainage channels, provisi on of primary health care, provision and maintenance of traffic lights among others, to promote economic development in Nansana Munispality.

(a)Person in gainful employment (with salaries and wages) Self-employed and practicing professionals (medical and veterinary doctors, engineers, accountants, consultants, technicians, lawyers, dentists, pharmacists, architects, scientists, surveyors, valuers, ICT specialists and any other self-employed professionals not mentioned) and any other businessmen and women not mentioned, is based on the turnover of the businesses and categorized in 10 (ten) bands as shown in the table 5

In the first four months of every financial year for employees earning a salary or wage.  Once in a financial year for Professionals, Artisans within the first four months. Once every twelve months for Businessmen/women before being issued/ together with a trading license. Further justification of Nansana Municipal Council’s arguments on retention of a number of revenue Charges/ taxes particularly Local Service Tax (LST) and Local Government Hotel Tax (LHT) lies in the following facts: • Explanation in the introduction of the LGs Act (Amendment) 2005 where it was expressly stated that LST & LHT were being introduced to bridge the gap created when Graduated Tax (GT) payments had been abolished. • The unwritten but the most commonly known fact that the new taxes (LST & LHT) are fair, progressive.

Employees earning a salary or wage- Under this category; the employer will submit a salary schedule with the respective local service tax computation therein to Nansana Municipal Council for assessment. Employers may deduct in 4 equal instalments, the LST payable by an employee. Professionals, Artisans, businessmen/women- Assessment is done alongside trading license or by separate assessment by authorized Nansana Municipal Council Officials. Computation of Local Service Tax for Artisans: The computation of LST for artisans is based on 3 bands. The artisans who gets monthly income of UGX 100,000 and not exceeding 200,000 pays UGX 5,000 as annual LST and those earning in between UGX 200,000 but not exceeding UGX 300,000 pay UGX 10,000 annually as tax and those earning above UGX 300,000 pay UGX 20,000 annually as tax. The artisans referred to are Craftsmen, plumbers, builders, electricians, masons, carpenters, mechanics, blacksmith, painters, welders, bakers, furniture makers, florist, tailors, radio and TV repairers, hairs dressers, semi-skilled artisans and any other artisans not mentioned.

Computation of Local Service Tax for Businessmen/women: The computation of Local Service Tax for Business proprietors is in respect of persons or entities who include but may not be limited to the following: owners of shops , fuel stations, restaurants, bars ,furniture workshops, printer workshops; Directors and shareholders of business companies, food vendors ,commission agents, insurance brokers, butchers ,real estate service providers; road construction firms, outside catering service providers, coffee millers , maize millers , fish mongers , timber merchants, garage owners and shoe makers Self-employed artisans (craftsmen, plumbers, builders, electricians, masons, carpenters, mechanics, blacksmiths, painters, welders, bakers, furniture makers, florists, skilled artisans and any other artisans not mentioned excluding sole petty artisans and “juakalis”, who are not fully established and not business entities). (e) Commercial farmers Who is exempted from paying Local Service Tax?  Salaries of the following are exempted from the payment of local service tax: (a) Members of the Uganda People’s Defense Force. (b) Members of the Uganda Police Force. (c) Members of the Uganda Prisons Service. (d) Members of the Local Defense forces sometimes referred to as LDU’s; and (e) Members of the Diplomatic missions accredited to Uganda.  The following persons are also exempt from the payment of local service tax. (a) Unemployed persons and peasants. (b) A person engaged in subsistence or occasional economic activities. (c) Petty food vendors. (d) Boarder-Boarder (BODA-BODA) cyclists. (e) Sole petty artisans and juakalis, who are not fully established and are not business entities; and People living in poverty who are unable to earn a minimum income to access basic necessities of life. NB: For the purpose of this regulation, “peasants” include people who produce for their own subsistence and have nothing or very little to sell to the market. Payment can be made by using payment platforms or Banks including Online Payment Options (VISA, MasterCard, American Express, Union Pay, Mobile Money) ,Payment Transfer Instructions (EFT, RTGS and Swift), Other Payment Options (Cheque, Mobile Money, Demand draft, Point of Sale). Upon confirmation of payment, a trading license certificate is issued at any of the Nansana Municipal Council Revenue service points

 Computation and Rates of local service tax in respect of persons in gainful employment and earning a monthly take-home salary. The local service tax on persons in gainful employment and earning a monthly take-home salary shall be levied as follows

(2) In this regulation, “take-home salary” means gross.

(3) For the avoidance of doubt, all the professionals, technicians, consultants and artisans who are in gainful employment and earn a monthly salary shall pay local service tax according to their monthly salary based on prototype computation as elaborated below: Assume that a worker earns UGX 420,000 per month: The LST computation according to the Local Government (Amendment) Act would require that the Income earner be subjected to payment of PAYE first, however, in matters of tax administration, the Income Tax Act supersedes the Local Government Act. This means that LST is a deduction from the gross monthly income of taxpayer as tabulated in the example below.

Computation of Local Service Tax for Professionals The computation of LST for professional is based on 2 bands. The professional who gets monthly income of UGX 1, 000,000 and above pays 100,000 as annual LST and those earning in between UGX 500,000 but not exceeding UGX 1,000,000 pay UGX 50,000 annually as tax. The professionals referred to are Medical and Veterinary Doctors, Engineers, Accountants, Consultants, Technicians, Lawyers, Dentists, Pharmacists, Architects, Scientists, Surveyors, Valuers, ICT specialists and any Other self-employed professionals not mentioned.