Local Service Tax (LST) in Uganda: Rates, Deadlines and How to Deduct It
The full LST schedule from UGX 5,000 to UGX 100,000 a year, how the July–October instalments work, and why an LST month lowers PAYE on a Ugandan payslip.
By Vuplon Payroll Team · · 2 min read
What Local Service Tax is
Local Service Tax (LST) is levied by local governments under the Local Governments Act on people who earn an income in their area — employees, business owners and professionals alike. For employees, the employer deducts it from pay and remits it to the local government where the employee works.
It is a small tax next to PAYE, which is exactly why it is easy to get wrong: the wrong band, the wrong months, or a deduction for someone who has already paid elsewhere.
The LST schedule
LST is graduated by monthly income, up to a maximum of UGX 100,000 a year. Earners on UGX 100,000 a month or less pay nothing.
| Monthly income (UGX) | Annual LST (UGX) |
|---|---|
| Up to 100,000 | Nil |
| 100,001 – 200,000 | 5,000 |
| 200,001 – 300,000 | 10,000 |
| 300,001 – 400,000 | 20,000 |
| 400,001 – 500,000 | 30,000 |
| 500,001 – 600,000 | 40,000 |
| 600,001 – 700,000 | 60,000 |
| 700,001 – 800,000 | 70,000 |
| 800,001 – 900,000 | 80,000 |
| 900,001 – 1,000,000 | 90,000 |
| Above 1,000,000 | 100,000 |
When it is deducted
LST is collected in the first four months of the financial year: July, August, September and October. Most employers split the year's amount into four equal instalments — UGX 25,000 a month for someone in the top band — while others deduct the whole year in a single month.
Either is acceptable; what matters is choosing one approach, telling employees, and applying it consistently. In Vuplon the choice is a payroll setting: four instalments, or once in a month you pick.
How LST interacts with PAYE
LST is an allowable deduction for income tax, so PAYE is charged on pay after the LST deducted that month. The effect is that an LST month costs the employee less than the LST itself.
Take a salary of UGX 1,500,000 with LST in four instalments. In August, LST is UGX 25,000 and PAYE is charged on UGX 1,475,000, giving UGX 330,750. In November, with no LST, PAYE is UGX 338,250. Net pay is UGX 17,500 lower in the LST month — not the full UGX 25,000.
| August (LST month) | November | |
|---|---|---|
| Local Service Tax | 25,000 | 0 |
| PAYE | 330,750 | 338,250 |
| Employee NSSF (5%) | 75,000 | 75,000 |
| Net pay | 1,069,250 | 1,086,750 |
One council, once a year
Nobody should pay LST to more than one local government in the same financial year. An employee with two jobs pays through their primary employer, and someone who joins you mid-season may already have paid through a previous employer.
Ask new joiners for evidence of LST already paid this year before you deduct it, and keep that evidence on their file. It is far easier than refunding a double deduction later.
Remitting and keeping records
Remit LST to the council where each employee works — the district, municipal or city council, and in Kampala, KCCA — with a schedule of the employees and amounts. Councils set their own remittance arrangements, so confirm the deadline with yours and keep every receipt.
Vuplon's free Uganda PAYE calculator shows the LST band it applies and the effect on PAYE for any salary and month, so you can check a payslip before it goes out.