JOSHUA KATO: Are you a Freelancer in Uganda?

The gig “economic system” also referred to as the sharing or entry economic system refers to a labor market the place people usually work on a contract or impartial contractor foundation, taking on particular person duties or “gigs” slightly than being employed in conventional full-time jobs. On this mannequin, staff are paid for the particular duties they full, versus receiving common salaries. Gig-workers generate income by performing providers or finishing up duties on and as when wanted foundation. The African gig economic system is estimated at USD 900 billion {dollars} as cited by Neha Pandya, the COO Flip Africa.

In Uganda identical to different African nations, the excessive ranges of unemployment, the COVID-19 pandemic have been among the underlying components which have made the youths totally embrace the “Gig Economic system” and the elevated developments in digital expertise has led to the beginning of Protected-Boda, Jumia Meals, Kikuubo On-line, Jiji, on-line influencers, digital advertising and marketing and consulting and many others.

Within the U.S, Pew Analysis Heart confirmed 16% of U.S. staff who’ve earned cash by way of a web based gig platform like Uber, DoorDash or Instacart. It appears considerably an economic system sort that’s right here to remain!

Within the dynamic panorama of recent work the place there is a chance to be your individual boss or just to make some additional money, freelancing has emerged as a viable avenue for people to harness their expertise and create a versatile revenue stream. Sounds attractive! Proper?  Surprisingly this freedom comes with extra sophisticated tax obligations than you usually have as a conventional worker who’s subjected to PAYE. It’s simple to slide and find yourself on the hook for sudden taxes from the URA — in addition to curiosity and penalties — particularly whenever you’re new to gig work.

Whereas freelancers take pleasure in the advantages of autonomy and versatile work preparations, this text explains the distinct tax duties and tax implications that include this mode of employment.

In Uganda, the tax system for freelancers is influenced by so many components amongst which embody your revenue ranges, deductions, and the character of providers rendered. 

  1. Earnings Tax.

Similar to every other taxpayer, revenue derived by freelancers is topic to revenue tax. At the moment, the revenue tax charges for particular person taxpayers, together with freelancers, are structured as follows in opposition to the chargeable revenue.

As much as 235,000 Ugx – No tax

235,001 to 335,000 Ugx – 10% tax fee

335,001 to 410,000 Ugx – 20% tax fee

410,001 to 10,000,000 Ugx – 30% tax fee

Above 10,000,000 Ugx – 40% tax fee

It’s important to contemplate that these charges can change, and freelancers ought to keep up to date on any amendments made by the Ugandan authorities.

  1. Worth Added Tax (VAT)

VAT is a consumption tax levied on the worth added at every stage of the availability chain within the manufacturing and distribution of products and providers. Relying on the providers supplied, freelancers could also be required to register and cost Worth Added Tax (VAT) on an bill. VAT in Uganda is at a fee of 18%. Some merchandise/providers are VAT exempt, VAT deemed or VAT commonplace rated. Earlier than you contain within the provide of any, seek the advice of a tax skilled for recommendation that can assist you verify whether or not what you might be providing falls beneath the scope of VAT laws.

  1. Withholding Tax (WHT)

WHT is a tax sort deducted on the supply earlier than cost is made to the recipient. The federal government ensures that taxes are collected on sure varieties of revenue, similar to curiosity, dividends, royalties, and funds to contractors the place freelancers fall. WHT is relevant when aggregated quantity payable exceeds the edge of 1 million shillings. The WHT fee is 6% when a resident shopper makes cost to a resident freelancer. This adjustments when a transaction entails a non-resident whose WHT tax fee for skilled, administration, and consultancy providers is 15%.

  1. Social Safety Contributions

Freelancers in Uganda may voluntarily contribute to the Nationwide Social Safety Fund (NSSF). The NSSF supplies social safety advantages to eligible people. This contribution is often calculated primarily based on a share of the person’s gross earnings. Whereas this isn’t an revenue tax, it’s an vital monetary consideration for freelancers to issue into their finances.


Zamu Namakula a Ugandan freelancer earns 5,000,000 Ugandan Shillings in a yr of revenue. Let’s have her fundamental breakdown of her potential tax liabilities

  1. Earnings Tax (30% on earnings above 410,000 Ugandan Shillings) = 0.30 x (5,000,000 – 410,000) = 1,317,000 Ugandan Shillings

Relying on Zamu’s particular circumstances, she may also must account for VAT, withholding tax if relevant, and every other relevant taxes.

  1. The place an organization A (A withholding tax agent) has contracted Zamu to supply her freelancing providers and pays her Ugx 5,000,000 

WHT = (6% on Ugx 5,000,000) = (0.06 x 5,000,000) = Ugx 300,000

Subsequently, you could undertake a proactive method as an influencer by understanding that a lot as nobody controls you, you could have a tax obligation to the next; –

  • To Keep Knowledgeable of any adjustments to tax charges or laws in Uganda to make sure high notch compliance.
  • To keep up and preserve correct information of your revenue, bills, invoices, and receipts. This documentation will likely be vital throughout tax submitting.
  • To finances for Taxes by factoring in your tax obligations when setting and charging your charges to your prospects. Shield your self from surprises when tax season arrives.
  • Seek the advice of tax professionals or accountants that can assist you optimize your tax technique and reduce potential points.

The author is a Chartered Tax Accountant with Uganda Baati Restricted

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