The Pay As You Earn (PAYE) system in Botswana is a vital part of the taxation framework, aimed at streamlining tax collection from individuals. Administered by BURS, PAYE mandates employers to deduct income tax directly from employees’ salaries. PAYE rates are progressive, meaning individuals with higher incomes are taxed at increased rates. It is therefore essential for employers to ensure that PAYE is accurately collected and remitted to BURS, as it significantly contributes to government revenue.
WHAT CONTRIBUTES TO DEDUCTIONS FOR PAYE
There are several items that are frequently overlooked when determining an employee’s PAYE. Below is a list of common benefits that should be subject to taxation by adding them to the basic salary of an employee and the necessary tax rate applied:
- Year-End Bonus: Any bonus awarded, should be taxed, regardless of its amount. This bonus is added to the gross income, and the applicable tax rate is then applied to calculate the tax owed to the Botswana Unified Revenue Service (BURS).
- Vouchers: Vouchers provided to employees are considered a benefit derived from employment and must therefore be accounted for in tax calculations.
- Car Usage/Benefit: When an employee drives a company vehicle home after working hours, this constitutes a taxable benefit, necessitating appropriate tax treatment.
- Housing Allowance, Furniture and Security benefits: These benefits should also be included in the employee’s basic salary and should be taxed accordingly.
IN-CONLUSION
Employers need to ensure that PAYE is deducted and remitted to BURS according to the Income tax Act to avoid severe penalties and charges by BURS.
By Thembinkosi H. Khalipha & Bonny M. Pitso-Tax Consultants @ Tax Arena
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