What are the prevailing income tax rates?

View the below table for the current individual tax bands and rates. 

 

 

Annual

Monthly

Rates

On the first

Shs. 147,580

Shs. 12,298

10%

On the next

Shs. 139,043

Shs. 11,587

15%

On the next

Shs. 139,043

Shs. 11,587

20%

On the next

Shs. 139,043

Shs. 11,587

25%

On all Income Over

Shs.564, 709

Shs. 47,059

30%

Does PAYE include earnings from casual employment?

No.

"Casual employment" in this case refers to employment that is under one month. 

Regular part-time employees and regular casual employment, where the employees are employed casually but regularly, are not considered to be casual employees.

Are employee benefits taxable?

Yes. 

Where an employee enjoys a benefit, advantage or facility of whatsoever nature in connection with employment or services rendered; the value of such benefit should be included in the employee’s earnings and charged to tax.

Taxation of loans to employees (Fringe Benefits Tax)

Sometimes employers provide loans to their employees and charge an interest lower than the prescribed rate. This becomes a benefit to the employee, for which the employer needs to file and pay Fringe Benefit Tax. 

The difference between the prescribed rate and the employer’s loan rate is chargeable to tax, on the employee.

How are loans to employees taxed?  

This is a tax on loans to employees.

 

When an employer provides a loan to an employee and charges interest below the prescribed rate of interest, then the difference between the prescribed rate and the employer’s loan rate is a benefit from employment, that the employee should pay tax for. 

 

This is type of tax is called Fringe Benefit Tax