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This tax calculator provides for the simplified calculation of monthly Pay As You Earn (PAYE) chargeable on the employment income earned by resident employees. The calculator applies for the fiscal years 2022/2023.

The rates of Income Tax upon resident individuals, that is, persons other than legal or juristic persons, are contained in the Second Schedule of the Income Tax Act 1993 (as amended). The prevailing income tax structure came into effect from 01 April 2022 as follows:

 

Chargeable Income                                                                          Rate of Tax

First M67, 440.00 per annum (M5, 620.00 per month)                      20%

Excess over M67, 440. 00 per annum (5, 620.00 per month)           30%

 

The non-refundable personal Tax Credit of M10, 560.00 per annum (M880.00 per month) is allowable or deductible from the sum of tax liability calculated by applying the two tax rates above. The personal tax credit applies in favour of resident individuals only.

 

Calculation of Tax Payable

The tax payable is calculated in three simple steps below:

 

  • First, the tax liability is calculated by applying the tax rates indicated above on the chargeable income of the individual and add the two results.

 

  • Second, the sum of the tax liability determined in the first step above is reduced by the tax credit (M10, 560.00 per annum or M880.00 per month); i.e. total tax liability less tax credit.  

 

  • Third, the positive difference between the tax liability and the tax credit is the tax payable by the resident individual. Where the difference is negative or nil, the income is considered nontaxable. The negative or nil outcome results from the application or allowance of non-refundable tax credit and does not imply the tax refund to the individual in the case of the negative outcome; it only means that the income is not taxable.

 

Deductions allowable before calculation of PAYE

 

Where an employee makes a contribution to an approved employer superannuation fund (i.e. pension fund, provident fund, etc. that complies with income tax law) the contribution must first be deducted from the employment income before applying the tax rates above, provided such contribution does not exceed 20% of the employee’s employment income. Where the contribution exceeds 20% of employment income, the maximum of 20% must be deducted. The income left after deduction of the superannuation fund contribution is the chargeable income, which can be entered into the tax calculator or the tax rates and credit applied thereon, to determine the tax payable. It is only the employee’s contribution, (not the total of employee’s and employer’s contributions), that is deductible from employee’s employment income.

 

REMINDER: The tax calculator only uses monthly amounts/income.