Online Services - PAYE
What is PAYE?
Pay as You Earn (PAYE) system is a method of paying Income Tax on remuneration. The employer deducts tax from your salary or pension earnings before paying you the net salary or pension.
Laws on PAYE?
The Income Tax Act [Chapter 23:06] specifies what elements of an employee's remuneration or earnings are subject to tax and at what rate of tax. It also deals with what income is exempt from tax and what deductions are allowed from these earnings, prior to tax being calculated.
Mechanics of PAYE
Assume then for a moment that everything you earn, be it in cash, benefits, or an item of value you are given instead of cash, is subject to some form of tax. However, the determining of the value and its associated tax liability in respect of any of these forms of payments will differ in some cases.
The official tax table operates on an escalating scale basis, (i.e. the higher your earnings, the greater percentage tax you pay on each bracket of earnings). When your earnings reach a certain amount, the percentage stops increasing and a flat rate of tax becomes applicable for any earnings above this level, that is the Marginal Tax Rate (MTR).
The tax-free threshold for individual taxpayers has been raised from US$225.00 to US$250.00 with effect from 1st January 2012.
The due date for the submission of PAYE returns and payments is the 10th of the following month.
PAYE is calculated as follows:
- Determine gross income for the day/week/month/year
- Deduct exempt income, for instance bonus: You get =>
- Deduct allowable deductions, e.g. pension: You get =>