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.
Pay As You Earn (PAYE) is a tax charged by an employer from an employee’s 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
Employment income is the total earnings of an employee that arise from an employment relationship. Total earnings refer to all income received by or credited in favor of an employee arising from an employment relationship.
Employment income includes the following: wages, salaries, bonuses, allowances, overtime payments, leave payments, commission, gratuity, supplementary pay, fees, severance pay and other income of similar nature. It may even be gifts by the employer or third parties that would otherwise not be given, but for the employment relationship. Find the guide on the attachments below
How is the employment income taxed?
Under the PAYE system, the amount of tax to be deducted from the employee’s remuneration or total earnings depends on the following:
- The employees’ total earnings,
- The applicable marginal tax rates,
- Allowable deductions (e.g. Contributions to an approved pension fund, retirement annuity fund.)
Resident Individuals: marginal rates per annum –
1st M64, 200. 00 @ 20%,
excess @ 30%
less Tax Credit of M10, 080.00
Non-residents: standard rate – 25%
Tax Tables PAYE Tax Calculator
Is a tax that is charged on profits generated by the company and other corporate bodies in a given year of assessment. It is a direct tax administered under the income tax Act of 1993 (as amended).
This is tax paid ahead of the financial year end, usually/preferably in Two (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. Find the guide on the attachments below
Advanced 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. Find the guide on the attachments below
|Corporate Tax Guide.pdf||85.74 KB|
|Advanced Corporation Tax Guide.pdf||61.43 KB|
|Income_Tax_Order_1993_ Explanatory_ Memo.pdf||697.63 KB|
|Income Tax Act 1993 Updated up to 1 April 2012.pdf||663.4 KB|
|PAYE Guide 2018-19.pdf||1.17 MB|
|FBT Public Ruling.pdf||3.18 MB|
|Withholding Tax Guide.pdf||2.74 MB|
|Guideline on Technical Services.pdf||144.35 KB|
|Provisional tax guide_2018.pdf||1.88 MB|
|Tax registration guide_2017.pdf||1.88 MB|
|Taxation of Foreign Nationals.pdf||809.81 KB|