"Revenue from the community
for the community"
Individual Employee

If you are an employee, your income is employment income therefore liable to tax. Your employer is obliged under the law to withhold tax (PAYE) if any, by applying the tax rates in the table below, and remit it to the Ministry accompanied by the appropriate form.

Gross Employment Income

Your gross employment income is your basic salary or wage plus bonuses, allowances, benefits in kind, etc.

Tax Rate

Gross Income

Tax Rate

$0 - $7,400

Nil

$7,401 - $30,000

10%

$30,001 and over

20%

 

 

 
No Deductions Allowed

Employees have no allowable deductions. In other words, expenses are not taken into account as tax rates are imposed on the gross income.

Tax Calculation

Example 1

Gross income is $7,000 for the year. This is below $7,400 therefore no tax is deducted from salary or wage.

Example 2

Gross income is $10,000 for the year. PAYE is calculated as follows:

 

$0 - $7,400

Nil

$7,400-$10,000 ($2,600 x 10%)   

$260 tax

 

 

 

Therefore tax deducted from salary for the year is $260.

Example 3

Gross income is $34,000. PAYE is calculated as follows –

$0 - $7,400

Nil

$7,400-$10,000 ($22,600 x 10%) 

$2,260

$30,000 - $35,000 ($5,000 x 20%)               

$1,000

Total tax deducted

$2,260 + $1,000

 

 

 

 

 

Therefore total tax deducted is $3,260 for the year.

Tax Withholding Certificate

At the end of your employer’s financial year, you should be provided your tax withholding certificate which is the Form 4 - Annual Tax Withholding Certificate. Your employer is obliged by law to provide you with this within 14 days after the financial year.

Your tax withholding certificate should show you how much your gross income for the year which should include your basic salary or wage plus other allowances and benefits. It should also show how much tax was deducted or withheld by your employer and paid to the Ministry.

Refund

If at the end of the financial year your tax withheld or deducted and paid to the Ministry is more than what should have been withheld, you are entitled to refund the excess. Your application for such a refund should be in Form 9 - Withholding Tax – Application for Refund and accompanied by a copy of your Form 4 - Annual Tax Withholding Certificate which your employer provided to you.

Short payment

If at the end of the financial year you tax withheld or deducted and paid to the Ministry is less than what should have been withheld, you are liable to pay the shortage. A demand letter will be sent to you with an assessment of the short payment plus the applicable administrative late payment penalty.

Improving the lives of Tongans through effective & efficient tax & customs administration