Employees’ tax (Pay As You Earn)

What is employment income?

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.

What are the different types of employment income?

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.

Who should pay employees’ tax?

Employees’ tax is payable by the employed persons (employees).

Who should administer the PAYE system?

The law requires employers to calculate employees’ tax correctly, deduct it, withhold and remit it to Revenue Services Lesotho (RSL) on before the 15^th day following the month in which tax was deducted.

What are the applicable tax rates?

Employment income is taxed in accordance with a progressive two-rate structure or marginal tax rates as follows:

The minimum marginal tax rate:                  20%

The maximum marginal tax rate:                 30%

As per the current income tax structure, where chargeable income

a. is between M 1.00 and M 6,170.00, the tax = 20% of the amount,

b. exceeds M 6,170.00 the tax = M 1,234.00 + 30% of excess over M 6,170.00, and

c. the non-refundable tax credit of M 970.00 is applicable to each resident individual.

When is the deadline for filing for employees’ tax return and pay tax due?

Employees’ tax is calculated, deducted and withheld by employers on a monthly basis through the PAYE system, however, employees are still liable to file returns and make payments, if any, on or before 30th June each year.

Employee's Tax (PAYE): the tax is calculated, deducted, withheld and remitted monthly by the employer, while the assessment is performed annually. 

Find the guide on the attachments below

Tax Tables PAYE Tax Calculator