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Mr. Lugezi enters into a contract to offer accounting services to Bagaga Kwegata SACCOS. He...

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Accounting

Mr. Lugezi enters into a contract to offer accounting services to Bagaga Kwegata SACCOS. He is to be paid UGX 80 Million for the service for the entire financial year. To do this work effectively, he has to buy a modern laptop at UGX 20 million. He also estimates that he will use fuel of about 500,000= per month. Bagaga Kwegata tells him to choose whether he will be an employee so that they deduct PAYE from him, or an independent contractor where they will only deduct Withholding tax.

  1. Mr. Lugezi comes to you for advice. Show him what the tax treatment will be for each of the two options and advise him on which he should take.
  2. Assume that Mr. Lugezi has taken the option of being an employee. He also has a part time job as a lecturer at Bagaga Kwegata School of Accounting, where he is paid UGX 50,000= per week. How much tax will he pay on this part-time job for the financial year?

INDIVIDUAL MONTHLY TAX RATES

Resident Individual

INCOME PER MONTH (UGX)TAX RATE235,000 and belowNilExceeding 235,000 but not exceeding 335,00010% of amount exceeding 235,000Exceeding 335,000 but not exceeding 410,00020% of amount exceeding 335,000 plus 10,000Exceeding 410,000

30% of amount by which exceeds

410,000 plus 25,000

Where exceeds 10 million, an addition

10% on amount exceeding 10 million

Non Resident Individual

INCOME PER MONTH (UGX)TAX RATENot exceeding 335,00010%Exceeding 335,000 but not exceeding 410,00020% of amount exceeding 335,000 plus 33,500Exceeding 410,00030% of amount by which exceeds 410,000 plus 48,500 Where exceeds 10 million, an addition 10% on amount exceeding 10 million

INDIVDIUAL ANNUAL TAX RATES

Resident IndividualFrom UGX 0 to 2,820,0000%From UGX 2,820,000 to 4,020,00010% of amount exceeding 2,820,000From UGX 4,020,000 to 4,920,000UGX 120,000 + 20% of amount exceeding 4,020,000From UGX 4,920,000 to 120,000,000UGX 300,000 + 30% of amount exceeding 4,920,000Above UGX 120,000,000UGX 34,824,000 + 40% of amount exceeding 10,000,000Non-resident individualsFrom UGX 0 to 4,020,00010%From UGX 4,020,001 to 4,920,000UGX 402,000 + 20% of amount exceeding 4,020,000From UGX 4,920,001 to 120,000,000UGX 582,000 + 30% of amount exceeding 4,920,000Above UGX 120,000,000UGX 35,106,000 + 40% of amount exceeding 120,000,000

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