In accordance with the Income Tax (Amendment) Act No. 3 of 2023, the personal allowance or free pay for employed and self-employed individuals was revised and takes effect from January 1, 2023:
The Annual Statutory Deduction in accordance with the amendment to Section 20 of the Income Tax Act, Chapter 81:01 is one million, twenty thousand dollars ($1,020,000).
Chargeable Income, taxable at the rate of twenty-eight percent (28%), is limited to two million, forty thousand dollars ($2,040,000) annually. While Chargeable Income in excess of two million, forty thousand dollars ($2,040,000) annually will be taxed at the rate of forty percent (40%) in accordance with Sections 20, 36 and 36A of the Income Tax Act, Chapter 81:01.
Additionally, Section 16(l) of the Income Tax Act, Chapter 81:01, was introduced in 2022 to provide for a deduction of medical and life insurance premiums from the Income of all individuals. The deduction is subject to premiums paid, a ceiling of ten percent (10%) of the individual income or three hundred and sixty thousand dollars ($360,000) annually, whichever is less. This measure is still effective in 2023.
Consequently, Employed Individuals earning remuneration up to two hundred and fifty-five thousand dollars ($255,000) monthly should be allowed, Personal Allowance (Free pay) of eighty-five thousand dollars ($85,000). In addition, National Insurance Scheme (NIS) Contribution of 5.6% and Medical and Life Insurance Premium Deductions (on the amount of premiums paid by the employee, which have a ceiling of ten percent (10%) of Gross Salary; or thirty thousand dollars ($30,000) monthly, whichever is less) will also be applicable in determining the Total Deductions allowed.
Employed Individuals earning remuneration above two hundred and fifty-five thousand dollars ($255,000) must be allowed a monthly Personal Allowance (Free pay) of one-third (1/3) of their Gross Income. In addition, National Insurance Scheme (NIS) Contribution of 5.6% and Medical and Life Insurance Premium Deductions (on the amount of premiums paid by the employee, which have a ceiling of ten percent (10%) of Gross Salary; or thirty thousand dollars ($30,000) monthly whichever is less) will also be applicable in determining the Total Deductions allowed.
The ceiling of the National Insurance Scheme Contribution is on the Gross Income up to two hundred and eighty thousand dollars ($280,000) per month or three million, three hundred and sixty thousand dollars ($3,360,000) which is applicable to employed persons and the employee’s contribution is 5.6% of their Salary.
Therefore, all employed persons should also be allowed a deduction of fifteen thousand, six hundred and eighty dollars ($15,680) monthly or one hundred and eighty-eight thousand, one hundred and sixty dollars ($188,160) annually when ascertaining Chargeable Income.
Self-Employed Individuals, whose Net Income (after expenses and allowances) for the year is three million, sixty thousand dollars ($3,060,000) and below, should be allowed a Personal Allowance (Free pay) of one million, twenty thousand dollars ($1,020,000); and Medical and Life Insurance Premium Deductions, (on the amount of premium paid for medical and life insurance, which have a ceiling of ten percent (10%) of Total Net Income; or three hundred and sixty thousand dollars ($360,000) annually, whichever is less), will also be applicable in determining the total deductions allowed.
Self-Employed Individuals, whose Net Income (after expenses and allowances) for the year is three million, sixty thousand dollar ($3,060,000) and above must be allowed a Personal Allowance (Free pay) of one third (1/3) on Net Profit; and Medical and Life Insurance Premium Deductions, (on the amount of premium paid for medical and life insurance, which have a ceiling of ten percent (10%) of Gross Salary; or three hundred and sixty thousand dollars ($360,000) annually whichever is less) will also be applicable in determining the total deductions allowed.
The Rate of Tax for all individuals is twenty-eight percent (28%) on Chargeable Income up to two million, forty thousand dollars ($2,040,000) annually and forty percent (40%) on the balance thereafter.
The General Threshold and Deductions for all Individuals are as follows:
| PARTICULARS |
DAILY |
WEEKLY |
FORTNIGHTLY |
MONTHLY |
YEARLY |
|---|---|---|---|---|---|
| Personal Allowance (Free Pay) | $2,795 | $19,615 | $39,231 | $85,000 | $1,020,000 |
| 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) | |||||
| Rate of Tax of 28% on Chargeable Income of $2,040,000 | 28% | 28% | 28% | 28% | 28% |
| Rate of Tax of 40% on Balance of Chargeable Income in Excess of $2,040,000 | Balance @40% | Balance @40% | Balance @40% | Balance @40% | Balance @40% |
| Salary | Net: Profit | Income Base per period | $8,384 | $58,846 | $117,692 | $255,000 | $3,060,000 |
PAYE INDIVIDUALS Weekly Income Tax Computation
| (A) Weekly Gross Salary (Inclusive of All Taxable Allowances) $ |
Personal Allowance |
N.I.S Deduction |
(B) |
(C) Chargeable Income (CI) |
( D) |
( E) $ |
Total Tax Payable |
|---|---|---|---|---|---|---|---|
| 25,000 | 19,615 | 1,400 | 21,015 | 3,985 | 1,116 | 1,116 | |
| (3,985*28%) | |||||||
| 50,000 | 19,615 | 2,800 | 22,415 | 27,585 | 7,724 | 7,724 | |
| (27,585*.28) | |||||||
| 70,000 | 23,333 | 3,618 | 26,951 | 43,049 | 10,985 | 1,527 | 12,512 |
| (64,615*.056) | (39,231*.28) | (43,049-39,231=3,818)
(3,818*.40) |
PAYE INDIVIDUALS Fortnightly Income Tax Computation
| (A) Fortnightly Gross Salary (Inclusive of All Taxable Allowances) $ |
Personal Allowance |
N.I.S Deduction |
(B) |
(C) Chargeable Income (CI) |
( D) |
( E) $ |
Total Tax Payable |
|---|---|---|---|---|---|---|---|
| 80,000 | 39,231 | 4,480 | 43,711 | 36,289 | 10,161 | 10,161 | |
| (36,289*28%) | |||||||
| 95,000 | 39,231 | 5,320 | 44,551 | 50,449 | 14,126 | 14,126 | |
| (50,449*.28) |
PAYE INDIVIDUALS: Monthly Income Tax Computation on Income $255,000 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 | 85,000 | 10,080 | 9,850 | 9,850 | 104,930 | 75,070 | 21,020 | 21,020 |
| (up to 10% of Gross Salary $18,000/$30,000 whichever is less) | (75,070*28%) | |||||||
| 224,000 | 85,000 | 12,544 | 40,000 | 22,400 | 119,944 | 104,056 | 29,136 | 29,136 |
| (up to 10% of Gross Salary $22,400/$30,000 whichever is less) | (104,056*28%) |
PAYE INDIVIDUALS Monthly Income Tax Computation on Income $255,001 and above
| (A ) Monthly Gross Salary (Inclusive of All Taxable Allowances) $ |
Personal Allowance |
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 | 46,052 | – | 46,052 |
| (up to 10% of Gross Salary $28,500/$30,000 whichever is less) | (164,470*28%=46,052) | ||||||||
| 360,000 | 120,000 | 15,680 | 30,000 | 30,000 | 165,680 | 194,320 | 47,600 | 9,728 | 57,328 |
| (170,000*.28=47,600) | (194,320-170,000)=24,320 | (47,600+9,728) | |||||||
| (up to 10% of Gross Salary $36,000/$30,000 whichever is less) | (24,320*.40%)=9,728 | ||||||||
| 750,000 | 250,000 | 15,680 | 40,000 | 30,000 | 295,680 | 454,320 | 47,600 | 113,728 | 161,328 |
| (up to 10% of Gross Salary $75,000/$30,000 whichever is less) | (170,000*.28)=47,600 | 454,320-170,000 = 284,320
(284,320*.40 = 113,728) |
(47,600+113,728) |
Self-Employed Individuals – YEARLY NET INCOME 3,060,000 and below
| (A) Yearly Net Income (After Expense & Allowance) $ |
Personal Allowance |
Medical and Life Insurance Premium Paid Annually |
Medical and Life Insurance Premium Deduction Allowed |
(B) |
(C) Chargeable Income (CI) |
(D) |
Total Tax Payable |
|---|---|---|---|---|---|---|---|
| 1,100,000 | 1,020,000 | 50,000 | 50,000 | 1,070,000 | 30,000 | 8,400 | 8,400 |
| (up to 10% of Gross Salary $110,00/$360,000 whichever is less) | (30,000*.28)=8,400 | ||||||
| 1,500,000 | 1,020,000 | 250,000 | 150,000 | 1,170,000 | 330,000 | 92,400 | 92,400 |
| (up to 10% of Gross Salary $110,000/$360,000 whichever is less) | (330,000*.28)=92,400 | ||||||
| 3,060,000 | 1,020,000 | 400,000 | 306,000 | 1,326,000 | 1,734,000 | 485,520 | 485,520 |
| (up to 10% of Gross Salary $306,000/$360,000 whichever is less) | (1,734,000*.28)=485,520 |
Self-Employed Individuals – YEARLY NET INCOME 3,060,001 and above
| (A) Yearly Net Income (After Expense & Allowance) $ |
Personal Allowance |
Medical and Life Insurance Premium Paid Annually |
Medical and Life Insurance Premium Deduction Allowed |
(B) |
(C) |
(D) |
(E) |
(F) |
|---|---|---|---|---|---|---|---|---|
| 3,100,000 | 1,033,333 | 400,000 | 310,000 | 1,343,333 | 1,756,667 | 491,867 | – | 491,867 |
| (up to 10% of Gross Salary $310,000/$360,000 whichever is less) | (1,756,667*.28=491,867) | |||||||
| 3,500,000 | 1,166,667 | 95,220 | 95,220 | 1,261,887 | 2,238,113 | 571,200 | 79,245 | 650,445 |
| (up to 10% of Gross Salary $350,00/$360,000 whichever is less) | (2,040,000*0.28=571,200) | 2,238,113-2,040,000 = 198,113.
(198,113*0.40 = 79,245) |
||||||
| 6,000,000 | 2,000,000 | 400,000 | 360,000 | 2,360,000 | 3,640,000 | 571,200 | 640,000 | 1,211,200 |
| (up to 10% of Gross Salary $600,000/$360,000 whichever is less) | (2,040,000*0.28=571,200) | 3,640,000-2,040,000 = 1,600,000
(1,600,000*0.40 = 640,000) |
4. Self-Employed persons should note that medical and life insurance premium should be deducted after determining the Balance of Income (that is deduced after deducting expenses and other allowances) and must not be included as an Expense in determining Chargeable Income.
5. 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, 2024, with the Statement of Earnings or their Form 7B when submitting their Income Tax Return to benefit from this deduction.
6. 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, 2024, with their Financial Statements when submitting their Income Tax Return to benefit from this deduction.
7. Commencing February, 2023 (but not later than March 2023), employers will be required to make the adjustments to their employees’ tax payable using the schedule below. Employers should use the revised personal allowance to recomputed the employees tax payable and refund tax over-deducted until the employee is fully refunded.
8. The Schedule below must accompany the Form 5 for the month of February 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. | ||||
9. In cases where the amounts to be refunded are in excess of the month’s tax, then the difference will be carried forward to the next month or until it is fully refunded to the employee.
10. An amended Form 5 for January 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.
11. Where an employee or a self-employed person pays their own Medical and Life Insurance Premiums, the Employee or 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 Form 7B2 or Financial Statements.
12. Claims for Medical and Life Insurance Premium Deductions take effect from January 1, 2023.
13. Employers are reminded that they are obligated by law to issue their employees’ Statement of their earnings, for the employed period in the FORM 7A or 7B2.
14. 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
