In accordance with the Fiscal Enactments Amendment Act No. 5 of 2022, and with effect from January 1, 2022, the statutory deduction or free pay for employed and self-employed individuals has been revised from seven hundred and eighty thousand dollars ($780,000) to nine hundred thousand dollars ($900,000).
Additionally, Section 16(l) of the Income Tax Act, Chapter 81:01, now provides for a deduction of personal medical and life insurance premiums paid up to a ceiling of ten percent (10%) of Income or three hundred and sixty thousand dollars ($360,000) annually, whichever is less.
Consequently, the chargeable income of Employees should now be calculated after allowing for the statutory free pay, employees’ contribution to the NIS (5.6% of Salary with an annual ceiling of $280,000), and Medical and Life Insurance premiums (if applicable) of 10% of Gross Salary or annual amount of $360,000, whichever is less.
Resulting from the change in the threshold, Chargeable Income taxable at the rate of twenty-eight percent (28%), is limited to one million, eight hundred thousand dollars ($1,800,000) annually, while Chargeable Income in excess of one million, eight hundred thousand dollars ($1,800,000) annually, will be taxed at the rate of forty percent (40%) in accordance with Sections 36 and 36A of the Income Tax Act, Chapter 81:01.
The General Threshold and Deductions for all Individuals are as follows:
| PARTICULARS |
DAILY |
WEEKLY |
FORTNIGHTLY |
MONTHLY |
YEARLY |
|---|---|---|---|---|---|
| Statutory Deduction | $2,466 | $17,308 | $34,615 | $75,000 | $900,000 |
| National Insurance Scheme (up to $280,000) | 5.6% of Gross Salary | 5.6% of Gross Salary | 5.6% of Gross Salary | 5.6% of Gross Salary | 5.6% of Gross Salary |
| Medical and Life Insurance Premium Deduction (on the amount of premium paid by individuals for medical and life insurance premiums, limited to ten percent (10%) of Gross Salary; or $360,000 annually whichever is less)Laundry | |||||
| Rate of Tax of 28% on Chargeable Income of $1,800,000 | 28% | 28% | 28% | 28% | 28% |
| Rate of Tax of 40% on Balance of Chargeable Income in Excess of $1,800,000 | Balance @40% | Balance @40% | Balance @40% | Balance @40% | Balance @40% |
| Salary Base per period | $7,397 | $51,923 | $103,846 | $225,000 | $2,700,000 |
PAYE INDIVIDUALS Weekly Income Tax Computation
| (A) Weekly Gross Salary (Inclusive of All Taxable Allowances) $ |
Statutory |
N.I.S Deduction |
(B) |
(C) Chargeable Income (CI) |
( D) |
Total Tax Payable |
|---|---|---|---|---|---|---|
| 20,000 | 17,308 | 1,120 | 18,428 | 1,572 | 440 | 440 |
| (1,572*28%) | ||||||
| 50,000 | 17,308 | 2,800 | 20,108 | 29,892 | 8,370 | 8,370 |
| (29,892*.28) |
PAYE INDIVIDUALS Fortnightly Income Tax Computation
| (A) Weekly Gross Salary (Inclusive of All Taxable Allowances) $ |
Statutory |
N.I.S Deduction |
(B) |
(C) Chargeable Income (CI) |
( D) |
Total Tax Payable |
|---|---|---|---|---|---|---|
| 80,000 | 34,615 | 4,480 | 39,095 | 40,905 | 11,453 | 11,453 |
| (40,905*28%) | ||||||
| 95,000 | 34,615 | 5,320 | 39,935 | 55,065 | 15,418 | 15,418 |
| (55,065*.28) |
PAYE INDIVIDUALS: Monthly Income Tax Computation on Income $225,000 and Under with Medical and Life Insurance Premium Deduction
| (A ) Monthly Gross Salary (Inclusive of All Taxable Allowances) $ |
Statutory |
N.I.S Deduction |
Medical and Life Insurance Premium Paid Monthly |
Medical and Life Insurance Premium Deduction Allowed |
(B) |
(C) Chargeable Income (CI) |
(D) |
Total Tax Payable |
|---|---|---|---|---|---|---|---|---|
| 180,000 | 75,000 | 10,080 | 9,850 | 9,850 | 94,930 | 85,070 | 23,820 | 23,820 |
| (up to 10% of Gross Salary $18,000/$30,000 whichever is less) | (85,070*28%) | |||||||
| 224,000 | 75,000 | 12,544 | 40,000 | 22,400 | 109,944 | 114,056 | 114,056 | 31,936 |
| (up to 10% of Gross Salary $18,000/$30,000 whichever is less) | (114,056*28%) |
PAYE INDIVIDUALS Monthly Income Tax Computation on Income $225,001 and above
| (A ) Monthly Gross Salary (Inclusive of All Taxable Allowances) $ |
Statutory |
N.I.S Deduction |
Medical and Life Insurance Premium Paid Monthly |
Medical and Life Insurance Premium Deduction Allowed |
(B) |
(C) Chargeable Income (CI) |
(D) |
(E) |
Total Tax Payable |
|---|---|---|---|---|---|---|---|---|---|
| 285,000 | 95,000 | 15,680 | 9,850 | 9,850 | 120,530 | 164,470 | 42,000 | 5,788 | 47,788 |
| (up to 10% of Gross Salary $28,500/$30,000 whichever is less) | (150,000*28%) | (164,470-150,000 =14,470)*0.40 | |||||||
| 750,000 | 250,000 | 15,680 | 40,000 | 30,000 | 295,680 | 454,320 | 42,000 | 121,728 | 163,728 |
| (up to 10% of Gross Salary $75,000/$30,000 whichever is less) | (150,000 *.28) | 304,320*.40 = 121,728 |
Self-Employed Individuals – YEARLY NET INCOME 2,700,000 and below
| (A) Yearly Net Income (After Expense & Allowance) $ |
Statutory |
Medical and Life Insurance Premium Paid Annually |
Medical and Life Insurance Premium Deduction Allowed |
(B) |
(C) Chargeable Income (CI) |
(D) |
Total Tax Payable |
|---|---|---|---|---|---|---|---|
| 1,000,000 | 900,000 | 50,000 | 50,000 | 950,000 | 50,000 | 14,000 | 14,000 |
| (up to 10% of Gross Salary $100,00/$360,000 whichever is less) | (50,000*.28) | ||||||
| 1,500,000 | 900,000 | 250,000 | 150,000 | 1,050,000 | 450,000 | 126,000 | 126,000 |
| (up to 10% of Gross Salary $150,00/$360,000 whichever is less) | (450,000*.28) | ||||||
| 2,700,000 | 900,000 | 400,000 | 270,000 | 1,170,000 | 1,530,00 | 428,400 | 428,400 |
| (up to 10% of Gross Salary $270,000/$360,000 whichever is less) | (1,530,000*.28) |
Self-Employed Individuals – YEARLY NET INCOME 2,700,001 and above
| (A) Yearly Net Income (After Expense & Allowance) $ |
Statutory |
Medical and Life Insurance Premium Paid Annually |
Medical and Life Insurance Premium Deduction Allowed |
(B) |
(C) |
(D) |
(E) |
(F) |
|---|---|---|---|---|---|---|---|---|
| 3,000,000 | 1,000,000 | 400,000 | 300,000 | 1,300,000 | 1,700,000 | 476,000 | – | 476,000 |
| (up to 10% of Gross Salary $300,000/$360,000 whichever is less) | (85,070*28%) | |||||||
| 3,500,000 | 1,166,667 | 95,220 | 95,220 | 1,261,887 | 2,238,113 | 504,000 | 175,245 | 679,245 |
| (up to 10% of Gross Salary $350,00/$360,000 whichever is less) | (1,800,000*0.28) | (2,238113-1,800,000=438,113 ) | ||||||
| 6,000,000 | 2,000,000 | 400,000 | 360,000 | 2,360,000 | 3,640,000 | 504,000 | 736,000 | 1,240,000 |
| (up to 10% of Gross Salary $600,000/$360,000 whichever is less) | (1,800,000*0.28) | (3,640,000-1,800,000=1,840,00 ) |
- The ceiling of the NIS is $280,000 annually and the employee’s contribution is 5.6% of Salary.
- Self-Employed persons should note that the 10% or $360,000, whichever is less, should be deducted after determining the Balance of Income (after deducting expenses and other allowances) and therefore must not be included as an Expense in determining Chargeable Income.
- Employers should note that changes to the following Forms: Forms 7B2, Return of Deductions of Tax by an Employer (Form 5), and the Return of Employers of Persons Employed by them (Form 2’s), which will be amended to accommodate Medical and Life Insurance Premium Deduction. Therefore, the Amended Form 5 must be utilized to report the employees’ earnings, NIS Deduction, Medical and Life Insurance Deductions, and Tax Deducted to the Guyana Revenue Authority on or before the 14th working day of the preceding month.
- Employers utilizing the online application form for submission must note the inclusion of the new Heading of Medical and Life Insurance Premiums Deduction.
- Employees, who pay their personal Medical and Life Insurance Premiums through their Employers’ Group Plan, are entitled to a deduction.
- Employed persons who have Private Medical and Life Insurance must obtain a statement of their premiums paid from their Approved Insurance Company and submit same on or before April 30, 2023, with the Statement of Earnings or their Form 7B when submitting their Income Tax Return to benefit from this deduction.
- Self-Employed persons who have Private Medical and Life Insurance must obtain a statement of their premiums paid from their Approved Insurance Company and submit same on or before April 30, 2023, with their Financial Statements when submitting their Income Tax Return to benefit from this deduction.
- Commencing March 2022, employers will be required to make the adjustments to their employees’ tax payable, using the revised threshold for Individual Income Tax and Medical and Life Insurance Premium deductions; and refund any amount of tax deducted from the employees’ income, in excess of what should have been deducted until the employee is fully refunded the tax over-deducted.
- The Schedule below must accompany the new Form 5 for the month of March 2022 to reflect taxes over-deducted. (Please check on GRA’s Website for the new form)
| No. | Name of Employee | Actual Deductions for the Month of January or February (Separately) | Over-Deductions
(January) or (February) (Payable to the employee) |
Amount to be Remitted as PAYE (Payable to the GRA) |
| 1 | Mary White | $10,480 | $5,000 | $5,480 |
| For example, if the sum of $5,000 was over-deducted from an employee in January or February and the employee’s tax in the month of March is $10,480; then the employer must deduct the $5,000 from the $10,480; refund it to the employee and remit $5,480 to the Guyana Revenue Authority. | ||||
- In cases where the amounts to be refunded are in excess of the month’s tax, then the difference will be carried over to the next month or until it is fully refunded to the employee.
- An amended Form 5 for January and February must be submitted to reflect the new threshold and deduction of Medical and Life Insurance Premiums, where the employer is responsible for any such deduction from the employee.
- Where an employee pays their own Medical and Life Insurance Premiums, the Employee will be required to:
-
- Provide their employer with a Statement/ Receipt form their Insurance Company as proof of payments for deductions to be made on monthly from their Income.
- Make a claim for the deduction on or before April 30 of the next year to the Guyana Revenue Authority when filing their Income Tax Returns: Consequently, those employees will be required to, when submitting their Income Tax Return:
a. Provide a copy of the proof of payment from their Insurance Company
b. Provide Banking Information: Routing or Transit Code, Bank Account Number for refunds to be deposited their accounts
c. Returns must be filed online via the Guyana Revenue Authority eservices platform - Self-employed person will be required to submit their Income Tax Return on or before April 30 and attach a Statement from the Insurance company of premiums paid along with their Financial Statements.
- Claims for Medical and Life Insurance Premium Deduction takes effect from January 1, 2022.
- Employers are reminded that they are obligated by law to issue their employees’ Statement of their earnings, for the employed period.
- All employers must ensure that the new Income Tax Thresholds and deductions are implemented immediately.
By Order of
Mr. Godfrey Statia
Commissioner General,
Guyana Revenue Authority
