If you are an employee, your income is employment income therefore liable to tax.Your employer is obliged under the law to withhold tax (PAYE) if any, by applying the tax rates in the table below, and remit it to the Ministry accompanied by the appropriate form.
Gross Employment Income
Your gross employment income is your basic salary or wage plus bonuses, allowances, benefits in kind, etc.
Old Tax Rate - Up to June 2017
New Tax Rate - July 2027
No Deduction Allowed
Employees have no allowable deductions. In other words, expenses are not taken into account as tax rates are imposed on the gross income.
EXAMPLE2 = GROSS INCOME $35,000
Current Rate (FikaE28099iLolotonga)
$30,000-74003D $22600 x 10% 3D $2260
$35,000- $30,000=3D $5000 x 20 % 3D 1000
Total Tax to Pay 3D $3260
New Rate (FikaE28099i FoE28099ou)
$30,000- $10,0003D 20,000x10%3D $2000
$35,000- $30,0003D 5,000 x 20%3D $1000
Total Tax to Pay 3D$3000
EXAMPLE 3 = Gross Income $120,000
Current Rate (Fika E2 80 99i Lolotonga)
$30,000 - 74003D $22,600 x 10%3D $2260
$120,000 -$30,0003D $90,000 x 20% 3D $18,000
Total Tax To Pay $20,260
New Rate ( FikaE28099i FoE28099ou)
$ 30,000- $10,000 3D $20,000x 10% 3D $2000
$60,000- $30,0003D $30,000x 20%3D 6000
$120,000- $60,000 x 25%3D $15,000
Total Tax To Pay 3D $23,000
Tax Withholding Certificate
At the end of your employer financial year, you should be provided your tax withholding certificate which is the Form 4 - Annual Tax Withholding Certificate. Your employer is obliged by law to provide you with this within 14 days after the financial year.
Your tax withholding certificate should show you how much your gross income for the year which should include your basic salary or wage plus other allowances and benefits.It should also show how much tax was deducted or withheld by your employer and paid to the Ministry.
If at the end of the financial year your tax withheld or deducted and paid to the Ministry is more than what should have been withheld, you are entitled to refund the excess. Your application for such a refund should be in Form 9 - Withholding Tax E28093 Application for Refund and accompanied by a copy of your Form 4 - Annual Tax Withholding Certificate which your employer provided to you.
If at the end of the financial year you tax withheld or deducted and paid to the Ministry is less than what should have been withheld, you are liable to pay the shortage. A demand letter will be sent to you with an assessment of the short payment plus the applicable administrative late payment penalty.