Self Employed

Every business has to be registered with the MRA.

Every self-employed has to file the following with the MRA:

1. A quarterly Current Payment System (CPS) statement when his gross income for the preceding year exceeds Rs 4 million and tax payable on chargeable income is more than Rs 500*
2. An Annual Return declaring his income for the preceding year

Penalty and Interest

• A penalty of Rs 2000 per month for late submission of Statement of Income
• A penalty of 5% of tax unpaid and interest at 0.5% per month

Every self-employed who employs worker(s) has to register to the MRA as an employer.

The self-employed has to file with the MRA:

1. Monthly PAYE / NPF / NSF / Levy Returns
2. Return of Employees

A self-employed having a small enterprise set up on or after 2 June 2015 and holding an SME Development Scheme Certificate may benefit from eight years income tax holiday.

*Note as from income year 2019/20, a self-employed may not file CPS statements if his turnover for the preceding year did not exceed 10 million rupees and if he is eligible to elect for the presumptive tax system.

Companies

Pay As You Earn (PAYE)

A company, upon becoming an employer, has to register with the MRA as an employer.

Obligations of companies

Every company should:

1. Withhold tax from emoluments of employees and  director’s fees
2. Submit a monthly PAYE return and remit any amount of PAYE withheld to the MRA
3. Hand out a statement of emoluments to employees every year
4. Submit to the MRA an annual Return of Employees

Tax Deduction at Source (TDS)

A company is required to deduct tax at the time of payment or at  the time money is credited to the payee’s account, whichever is earlier. Tax is deducted usually over a range of 0.75% to 15%. If tax to be deducted is less than Rs 500, no amount shall be deducted.

Who has to deduct TDS and when?

Every company, LLP, société has to deduct TDS when making the following payments:

• Rent
• Royalty
• Commission
• Payment for specified services
• Payment to contractors and sub-contractors

Due Dates for Payment to TDS

Due dates for TDS remittance to the MRA depends on the manner in which the return is made.

How returns are made?	Due Date
Electronically	End of following month of tax deduction
In person	Within 20 days of end of month of tax deduction

Advance Payment System (APS)

Every company, with an annual turnover over Rs 10 million, is required to file APS statements and to pay tax accordingly to the MRA.

An APS statement is filed where:

1. The company’s gross income for the preceding accounting year exceeded Rs 10 million
2. The company had a chargeable income.

Due date for submission of APS statement and payment of tax

Within 3 months from the end of the month in which the APS quarter ends.

Penalty for late payment of tax under APS

A penalty of 5% and interest at 0.5% per month

Annual Return

Every company has 6 months after its accounting period has ended to file a return of income and to pay tax, if any.

Return of statement of goods and services

Filing by 10 August

Contact us for your tax filings now and never pay a fine or penalty again.