URA raises alarm over secret payroll systems in schools

The Uganda Revenue Authority (URA) has warned school proprietors and administrators against using parallel payroll systems to evade taxes, saying the practice is illegal and undermines compliance.

The warning was issued during a tax engagement held at Prime Hotel in Tororo District on March 17, 2026, where URA officials met school directors, bursars and teachers to discuss tax obligations.

Andrew Kyakonye, the regional tax education officer, said investigations have revealed that some schools run two payroll systems, one for internal use and another submitted to URA.

“This results in under-declaration and is not acceptable,” Kyakonye warned.

He urged schools to treat tax compliance as a planned financial responsibility. He added that late filing attracts penalties of UGX 200,000 or two percent of the tax due, whichever is higher.

The session focused on Pay As You Earn and Withholding Tax obligations. Umar Kiyaga, the Tororo Domestic Taxes Station In-charge, advised schools to act early when dealing with suppliers.

“If you know your supplier will exceed UGX 1 million in a year, start withholding immediately. Do not wait,” Kiyaga guided.

He also addressed concerns raised by teachers about salary deductions, noting that taxation follows clear legal thresholds.

Officials further advised schools to structure contracts properly, especially for part-time and secondary staff, to ensure correct tax treatment and avoid disputes.

URA said the engagement is part of its ongoing efforts to address sector-specific tax challenges, improve understanding and make compliance easier for taxpayers.