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What is pay as you earn tax

A pay-as-you-earn tax (PAYE) or pay-as-you-go (in other countries) is a withholding tax on income payments to employees. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent they exceed tax as determined on tax returns. PAYE may include withholding the employee portion of insurance contributions or similar social benefit taxes. In most countries, they are determined by employers but subject to government review. PAYE is deducted from each paycheck by the employer and must be remitted promptly to the government.

Use our paye calculator to calculator your tax contributions

Income tax bands


Income Tax Bands (ZMW) Tax Rates (%)
3,300.00 and Below 0%
3,300.01 – 4,100.00 25%
4,100.01 – 6,200.00 30%
6,200.00 and Above 37.5%

ZRA Tax Computation Guide

The constitution of Zambia—under the PAYE system—mandates employers to deduct gross payments using the following variables

  • Total gross pay
  • Tax bands
  • Statutory deductions (e.g. NAPSA)

A key thing to bare in mind is that a proportion of statutory deductions are removed before the tax calculation—the amount deducted is either 15% of total statutory contributions or ZMW 255.00, whichever is the minimum.

References

  1. Zambia Revenue Authority (ZRA) Tax Tables
  2. Zambia Daily Mail
  3. 2018 Zambian Budget