Income Tax Amendment Bill: Finance Ministry proposes 35% personal income tax
Government, is proposing a 35% income tax on earnings of individuals in an amendment bill submitted to Parliament by the Ministry of Finance.
Clause 1 amends Act 896 by introducing a new section 2A to require a person to compute and pay tax on a minimum chargeable income of five percent of total income.
Clause 2 amends section 6 of Act 896 by adding winnings from lottery to the items to be included in the calculation of the amount specified for a year of assessment:
Clause 3 amends section 17 of Act 896 to provide for a person who is ascertaining the income of that person or of another person from a business for a year of assessment to deduct an unrelieved loss of the person for any of the previous five years of assessment from the business.
Clause 4 amends section 25 of Act 896 to provide for the deduction of any foreign currency exchange loss other than a loss that is capital in nature, incurred in the production of income. during the period in respect of a debt claim, debt obligation or foreign currency holding of that. person for the purposes of ascertaining the income of a person for a basis period.
Clause 5 amends Act 896 by introducing a new section 39A to provide for the submission of return for gains on realisation of assets and liabilities.
Clause 6 amends section 94 of Act 896 to exempt from income tax for 2023, a withdrawal from a provident fund or personal pension scheme before the retirement age by an employee due to loss of permanent employment or a self-employed person from the savings account provided under paragraph (a) of subsection (2) of section 109 of the National Pensions Act,. 2008 (Act 766).
Clause 7 amends Act 896 by introducing a new section 100A to provide for lottery operations.
Clause 8 amends section 115 of Act 896 to provide for a resident person to withhold tax at the rate specified in paragraph 8 of the First Schedule, where that person pays a dividend, winning from lottery, interest, natural resource payment, rent or royalty to another person or pays consideration to another person in respect of the realisation of asset or liability and the payment has a source in the country.
Clause 9 amends Act 896 by introducing a new section 116A to provide for a resident person to withhold tax on the gross amount of the payment at the rate specified in paragraph 8 of the First Schedule.
Clause 10 amends section 119 of Act 896 by substituting paragraph (f) of subsection (1) with winnings from lottery. The rationale for the amendment is to introduce a withholding tax on winnings from lottery.
Clause 11 amends Act 896 by substituting section 128 with a new provision. The rationale for the amendment is to provide clarity on persons in a controlled relationship. .
Clause 12 amends section 133 of Act 896 by introducing new definitions for “betting”, “game of chance”, “gaming”, “lottery” and “stake”.
Clause 13 amends the First Schedule to the Act by substituting paragraph 1 with a new paragraph. The rationale for the amendment is to revise the income tax brackets provided for in the paragraph and introduce an additional income tax bracket with a tax rate of thirty-five per cent. The clause further amends subparagraph (1) of paragraph 3 to provide for the chargeable income of a company and income from goods and services provided to the domestic market by a free zone enterprise after the concessionary period other than a company principally engaged in the hotel industry for a year of assessment to be taxed at the rate of twenty-five per cent.
The clause further amends paragraph 7 by introducing a new paragraph 7A to provide for the rate of tax on income from lottery operations.
The clause further introduces new sub paragraphs to provide for the rates of tax in the case. of winnings from lottery which is to be ten per cent on gross winnings at the end of each game, in the case of realisation of an asset or liability by a resident person, three per cent of the consideration received and in the case of realisation of an asset or liability by a non-resident person ten per cent of the consideration received.
Clause 14 amends the Fourth Schedule to the Act by substituting the table specified in paragraph 1 with a new table. The rationale for the amendment is to review the upper limits: for the motor vehicle benefits specified in the table.
