As an employer, you will have to deduct Pay As You Earn (PAYE) from your employees’ gross pay.
What is PAYE?
PAYE is a withholding tax which was introduced in Barbados in 1957 and simply means 'Pay As You Earn’. Currently every employee who earns a wage or salary of more than $481 per week or $2083 per month is liable to PAYE.
The P.A.Y.E. system allows the employee the privilege of paying his or her income taxes for an income year over a longer period than having to face paying a large tax bill when the return is filed. It is the best way for employed persons to meet their tax obligations without too much undue hardship as this system simply allows the employee the luxury of paying his or her taxes in fifty-two (weekly) or twelve (monthly) or manageable instalments.
Determining employee status
Each employed person starts with a basic allowance of $25,000 and this can increase depending on the amount of the allowances that person has claimed.
A person claiming $25,000 would have a tax code of 250W or 250M depending on whether that person was paid weekly or monthly. The code enables the employer to deduct the correct amount of tax from each employee.
Employer Obligations
After taxes have been deducted from all persons liable to tax the employer is obligated to pay all sums over to the Barbados Revenue Authority on or before the 15th of the month following the month in which it was deducted.
When Filing Your Monthly PAYE Returns:
- Ensure your employee(s) TIN is 13 digits
- Ensure correct spelling of employee’s name (Government issued)
Basic Salary Calculation
A person’s basic salary is calculated as Total Remuneration before deductions less Total Taxable Allowances and Benefits.
Example
Tina earns $7,500 per month which includes $500 travel allowance, $700 entertainment allowance and bonus of $1,000. Her basic monthly salary is therefore $5,300 ($7,500 – ($500+$700+$1,000)).
Income Tax Tables
If followed closely, the tax tables will greatly assist users in deducting the correct amount of tax. They will also advise the employer what amounts are taxable, what amount must be deducted for the month from the employee and how to account for the amounts deducted.
The main function of the Tax Tables is to show the employer how much PAYE to deduct from each person's pay package.
Seven (7) Tax Tables have been provided to assist the public with deducting the correct amount of tax from salary, wages or any other emoluments.
Please first refer to the below Tax Tables Instructions document (effective Income Year 2020) before utilising the various Tax Tables.
The below listed tax tables can be accessed HERE (google drive link):
- Monthly Table X
- Weekly Table X
- Daily Table X
- Yearly Table A
- Monthly Tables
- Weekly Tables
- Daily Tables
Tax Tables instructions - Income Tax Deductions from Emoluments
Guidelines for Filing Monthly PAYE Returns
Use the below guide when utilising our Microsoft Excel template to file your monthly PAYE returns. This guide explains what information should be entered within the columns in our Excel template. The monthly PAYE upload template can be downloaded here. **Please note:
- Column 35 (basic annual salary) should be Basic Monthly Salary.