Pay As You Earn (PAYE) is a tax charged by an employer from an employee’s earnings, then remitted to RSL. 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. 

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 (M11, 040.00 per annum or M920 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.

The Resident Individuals PAYE is calculated by applying marginal rates of 20% to the first M70, 500. 00 and 30% to the excess. Tax credit of M11, 040.00 is then deducted 

1st M70, 500. 00 @ 20%,

excess @ 30%

less Tax Credit of M11, 040.00

Non-residents: standard rate – 25%

Pay As You Earn (PAYE): the tax is withheld and collected monthly while the assessment thereof is performed annually. Find the guide on the attachments below

Tax Tables PAYE Tax Calculator