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Understanding 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.