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TRA PAYE Pay-As-You-Earn : Tanzania Revenue Authority

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Organisation : Tanzania Revenue Authority
Facility Name : PAYE Pay-As-You-Earn
Country : Tanzania
Website : https://www.tra.go.tz/index.php/paye

What is PAYE?

PAYE stands for Pay-As-You-Earn. It is a withholding tax on taxable incomes of employees. Under this system, an employer is required by law to deduct income tax from an employee’s taxable salary or wages.

Employee means:
An employee means an individual who is a subject of an employment conducted by an employer. It includes a permanent employee, part time, manager, director and casual employees. Employees may be employed by one or more employers (Primary and Secondary Employment).

Employer means:
An employer means a person who conducts, has conducted or has prospect of conducting the employment of an individual.

Full time service director means:
Means a person at a managerial position and is in full time service in a corporation.

Administration of PAYE

An employer is required to withhold income tax from salaries, wages and all other payments forming taxable income paid to an employee.

How To Calculate PAYE?

To Calculate PAYE, Follow the below steps

Step-1 : Go to the link https://www.tra.go.tz/calculators/paye.htm
Step-2 : Type your monthly pay after deducting PPF, NSSF or PSPF Contribution,
Step-3 : Then click on the “calculate PAYE” button to find your monthly Income Tax payable.

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FAQ On PAYE

Frequently Asked Questions FAQ On PAYE

How lump sum payments are treated?
Lump sum payments to employees may take the form of gratuities, leave pay, compensations, bonus, commissions etc. which may cover several months of the year or the whole of a year. Lump-sum payments other than terminal payments should be included in the year of payment and be taxed on the basis of the adjusted monthly pay for the year.

Terminal Lump sum payments which include redundancy and other payments for loss or termination of office shall be spread over a period of six years or actual years of employment and shall be taxed as income for these yea

What documents to be maintained by the employer?
Documents includes an account, assessment, book, certificate, claim, note, notice, order, record, return or ruling and may take an electronic form

The employer is required to keep the following documents: –
wage sheets and salary vouchers; and any other books, documents and records whatsoever relating to the calculation or payment of amounts to employees or tax withheld from such payments.

The employer must maintain these documents for a period of five years from the end of the year of income or years of income to which it relates unless the Commissioner otherwise specifies by notice in writing.

How contributions made to approved retirement funds are treated?
The amounts of contributions made by employee/employer to the approved retirement funds are reduced from the gross pay when calculating the PAYE. The amount of this reduction is equal to the lower of-

The total of the employee; or employer contributions where it is included in calculating the monthly pay made to approved retirement funds; and The statutory amount of the fund.

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