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Tax update

Personal income tax compliance

The notice no. PN/PAYE/2020-01, dated 15 April 2020 and published on the web portal of the Department of Inland Revenue (DIR) on 22 April 2020, carries further changes to the treatment of employment income. These changes are summarised below.

  • Employers are allowed to make the tax payment of employees under the pay as you earn (PAYE) scheme for a three-month period (1 January 2020 to 31 March 2020).
  • The payment can be made by deducting the tax from the respective employees’ remuneration or by any other manner, with the respective employees’ consent.
  • Employers must inform the employees of the said notice and offer them an option to deduct tax from the remuneration/collection of tax from employees during the period and make payments to the DIR on their behalf.
  • Employers also have an option of bearing the tax on behalf of employees.
  • Employers can calculate the tax liability of the respective employees as set out below. Tax on tax will apply if employers bear the tax on behalf of employees.