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  Description of Income Tax


Income tax as the name denotes is a tax payable on a person’s taxable income and is classified as a direct tax. It is regulated by the provisions of the Income Tax Act of 1993 and its regulations thereof.

It is imposed upon all persons earning income; being individuals, partnerships, companies or other taxable entities, to name a few; associations, trusts, clubs

It is assessed annually and all rates changes also fixed annually by parliament’s motion through the Minister of Finance’s recommendation through his budget speech.

Taxes levied under the Income Tax Act are;

  • Corporation Tax
  • Advance Corporation Tax (ACT)
  • Pay As You Earn (PAYE)
  • Withholding Tax (WHT)
  • Fringe Benefit Tax (FBT)
Easy Guide to filing Income Tax Return Download  
Provisional Tax Guide Download  
  Corporation Tax
This is tax paid ahead of the financial year end, usually/preferably in four (quarterly) installments. This helps ease the burden of paying the taxes due as a lump sum at the end of the financial year, with the taxpayer adding a little more to his payment if he had been under assessed and where the taxpayer had been over assessed, a refund will be made.
  Advance Corporation Tax (ACT)
This is a tax arising as consequence of distributions of dividends by a company and is not imposed on the company but on shareholders receiving such dividends.
  Pay As You Earn (PAYE)
Pay As You Earn (PAYE) is a tax charged by an employer from an employees earnings, then remitted to LRA.
All natural persons are entitled a tax credit (which is a saving of tax) from their tax liability, the amount of which is reviewed annually by the Minister of Finance
  Withholding Tax (WHT)
This is money withheld by the payer from the Gross amount (before VAT) payable to the payee on services rendered; that is, the payer (withholding agent) makes payment to the payee, less the withholding tax deduction and remits such to the LRA. As a general rule, withholding taxes are levied on supply of services and are applicable to both resident and non resident suppliers.
  Fringe Benefit Tax (FBT)

This is a tax imposed by the LRA on the employer, based on the employer’s fringe benefit taxable amount (the value of non cash benefits) afforded to the employee.

It is a requirement of the law that taxpayers file a return at the end of the financial year, being March 31st, with late submissions being charged penalty after the 30 June.

A taxpayer can lodge an application for late submission with The Commissioner General, citing reasons and at the Commissioner’s discretion, an extension may be granted.

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