30% Income Tax Rate Applied to Aggregate Income During

Published by the Ministry of Finance and the Public Service as a matter of highest importance.

During the FY2016/17 Budget presentation, the Hon. Audley Shaw, Minister of Finance and the Public Service, announced that the Income tax threshold would be increased from $592,800 to $1,000,272.00. This in effect means that all pensioners, P.A.Y.E. self-employed and other individuals would benefit from the increase which takes effect July 1, 2016, with a further increase to $1,500,096 on April 1, 2017. In addition to the tax break, an additional tax rate is to be applied to persons who earn over six million dollars ($6,000,000.00) resulting in a movement from 25% to 30% come July 1, 2016. Approximately, 12,000 persons representing 1% of all
individuals earning an income would fall in this category.

Income tax is computed on an individual's statutory income aggregated on a month to month basis based on the income tax employment regulations. Aggregate income means the total emoluments paid from January through to December.

Commencing in July the 30% will be applicable to the aggregate income earned in excess of $6 million. For example, if $500,000 is earned in January, $100,000 in February, $2,000,000 in March, $3,000,000 in April, $500,000 in May, and $1,000,000 in June, and $100,000 in July, the aggregate income in July is $7,200,000. The 30% would therefore be applicable to the $1,200,000 and on any additional income earned for the calendar year.
The example below shows the impact of the new tax measures on an individual earning over $6,000,000 when compared to 2015.

The impact of the new Tax Measure on income in excess of $6,000,000 An employee whose annual gross income is $8,000,064 for 2015, 2016, and 2017 5,203,464

  2015 Tax Liability 2016 Tax Liability 2017 Tax
Liability Salary 8,000,064   8,000,064   8,000,064   Nil Rate 557,232 Nil 796,536 Nil 1,375,140 Nil 25% 7,442,832 1,860,708 1,300,866 4,624,860 1,156,215 30%     2,000,064 600,019 2,000,064 600,019 Total   1,860,708   1,900,885   1,756,234

For year of assessment 2016:
 With the application of 30% on income in excess of $6,000,000.
 The first $796,536 is taxed at zero the next $5,203,464 @25% and the additional $2,000,064 @ 30%.
 This results in an additional $40,177 in tax liability.
For the year of assessment 2017:
 The first $1,375,140 is taxed at zero.
 The next $4,624,860 @25% and the additional $2,000,064@30%.
 This results in a tax savings of $104,474 when compared to year of assessment 2015.
 A tax savings of $144,651 when compared with 2016.
The Tax Administration team will be conducting sensitisation sessions with stakeholders to facilitate ease of implementation. The officials of the Ministry are also  available for further consultations with any group of persons who will be affected by the application of this new tax rate.