URA tipped to seize local service tax control
A finance leader argues that Uganda Revenue Authority should assume control of Local Service Tax collection from local governments to address systemic inefficiencies. Companies currently separate their workforce by municipality for compliance purposes, but most local authorities outside Kampala Capital City Authority remain unresponsive to LST inquiries. Businesses report waiting over a month for guidance while facing unclear filing procedures and inconsistent collection standards across different jurisdictions.
The proposed transfer would eliminate fragmented systems that discourage compliance by forcing firms to navigate multiple payment channels and timelines. URA’s existing digital infrastructure could standardize collection nationwide, while local governments would receive predictable funding transfers without having to manage the administrative burden. Centralization would allow employers to process LST through the same platform used for payroll taxes and value-added tax.
Advocates say the reform would strengthen domestic revenue collection without creating new levies. The shift aims to reduce costs, improve transparency, and help local authorities concentrate on delivering services rather than pursuing payments.
