The Guyana Revenue Authority (GRA) is refuting claims in the public domain that the proposed formula for calculation of Income Tax for all categories of persons announced in the 2017 Budget will result in especially medium and high income taxpayers taking home less net pay than they are taking home currently at the 30% rate.
In a press release issued today, the GRA said the proposed formula announced in the 2017 Budget guarantees more take home pay for each category of persons whether low, medium or high income.
It quoted Finance Minister Winston Jordan’s announcement that the rate of Income Tax will be determined in proportion to the individual’s gross earnings.
It was pointed out 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, the revenue authority said 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 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 is reminding 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.