No increase in salary, wages tax

THE 2021 Budget proposed increase in the salary and wages tax (SWT) of 4.5 per cent is meant for its collection and not the rate, according to the Internal Revenue Commission (IRC).
Clarifying misunderstandings by the general public, the IRC said it did not affect taxes next year.
It said the budget projected that the IRC would collect more than what was collected this year within the existing rate.
It outlined that volume one of the 2021 Budget on economic and development policies, paragraph three, page 51, puts to rest doubts to those misleading commentaries that the personal income tax (PIT) rate would increase.
According to the document mentioned, in 2021, PIT was estimated to increase to K3.4557 billion from K3.3089 billion or higher by 4.5 per cent as businesses reinstate hiring (or recommences furloughed employees) as a result of easing of the Covid-19 restrictions.
Taxes on income, profits and capital gains were projected at K5.9453 billion in 2021, comprising mainly of:

• K1.724 billion in corporate income tax;
• K3.136 billion in mining and petroleum tax;
• K2.184 billion in dividend withholding tax;
• K131.9 million in interest withholding tax;
• K62.8 million in royalties and management taxes; and,
• K38.8 million in non-resident insurers withholding tax.

Meanwhile, IRC has signalled all government contractors to update their taxes or risk not getting business from the government next year. It said as of Jan 1 next year, it will not engage the services of those service providers who fail to comply with their tax obligations.
All existing and potential IRC service providers were, therefore, encouraged to bring their taxes up to date.