Proposed tax formula guarantees increased take-home pay for all - GRA

Proposed tax formula guarantees increased take-home pay for all – GRA

Dec 03, 2016 News

The Guyana Revenue Authority (GRA) is assuring taxpayers that the proposed formula for calculation of income tax for all categories of persons announced in the 2017 Budget guarantees more take home pay for each category of persons – whether low, medium or high income.

According to GRA yesterday, Minister of Finance, Winston Jordan, who presented the budget last Monday had announced that the rate of Income Tax will be determined in proportion to the individual’s gross earnings.

Since the budget, citizens have expressed alarm that from indications certain tier of workers would be taking home less.

GRA, however, explained yesterday that it was stipulated that a monthly gross income of $180,000 or less will be taxed at the rate of 28% with a proposed threshold of $60,000 while monthly earnings above $180,000 will be taxed at two rates of 28% and 40% for every dollar of chargeable income.

“However, it is important to note that the threshold for a person earning more than $180,000 will be one-third (⅓) of their gross salary. Notwithstanding this, such individuals will attract the 28% Income Tax rate on the first $120,000 of their chargeable income and 40% Income tax rate on every dollar of chargeable income above $120,000.”

GRA said it is urging persons not to be despondent since according to the calculations based on the proposed formula, all categories of individuals will be taking home higher net salaries or income in 2017, which will be more than they would have taken home in 2016 based on the current rate of 30%.

GRA provided the following tax computations on incomes are provided as follows:

$60,000 Monthly Salary – Net salary increase by 0.88%.

$180,000 Monthly Salary – Net salary increase by 2.73%.

$300,000 Monthly Salary – Net salary increase by 4.13%

GRA also reminded that in the process of ascertaining the chargeable income of employees, National Insurance Scheme (NIS) contributions must be treated as a 5.6 % deduction of the gross salary with $11,200 being the maximum NIS deduction for salaries $200,000 and above.

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