IRD issues instructions to settle income tax obligations

The Inland Revenue Department (IRD) has issued instructions for individuals, partnerships and partners in a partnership and companies to settle the fourth quarter income tax instalment on or before May 15.

The IRD last has issued a notice to individuals, partnerships and partners in a partnership and companies to compute and pay their income tax liability for the year of assessment 2019/2020 in line with changes proposed to the Inland Revenue Act, No. 24 of 2017 (IRA), pending formal amendments being made to the Act.

The companies, individuals and partnerships are instructed to compute the assessable income and taxable income for the year by separating into two periods from 01.04.2019 to 31.12.2019 (before the proposed changes) and for last three months (from 01.01.2020 to 31.03.2020).

In terms of calculating taxes on individuals, during the first period, the income taxes are calculated under six brackets from 4 percent to 24 percent while during the second period, the income willbe taxed under three brackets in the second period from 6 percent to 
18 percent. 

However, the tax on income from a business consisting of betting and gaming, manufacture and sale or import and sale of liquor or tobacco products is maintained at 40 percent.

Further, IRD noted that it could deduct some of tax reliefs and credits granted subject to the provisions of the Inland Revenue Act. 
“Subject to the provisions of the IRA, foreign tax credit, non-final withholding tax credit and other tax credits granted or allowed can be deducted from the amount of total tax payable to calculate the income tax payable by the company for the year of assessment 2019/2020,” it stated.