A guide to use PAYE tax tables

Income Tax Act (Chapter 23:06) Thirteenth Schedule requires an employer to withhold and remit employees tax (PAYE) in accordance with the tax deduction tables as prescribed. The current tax tables are published by ZIMRA annually or periodically as may be necessary and can be downloaded using this link.

The tax tables make it easier for taxpayers to compute PAYE with examples indicated on each and every tax table.  The following are important as guidelines to pick the specific rates and withhold the correct amounts of PAYE:

• Currency
• Tax period
• Frequency
• Taxable income

Currency

There are separate tax tables for USD and RTGS.  The currency of remuneration determines the tax table to be used.

Tax Period

The tables vary from year to year and it is important to pick the correct table for the applicable year of assessment. Furthermore, there may be several tax tables for a single year and it is also important to select the correct period. For example, in 2020 there are tax tables for January to July and tax tables for August to December, again separately for RTGS and USD. This was caused by the fact that the year of assessment beginning on the 1st January 2020, in respect of the taxable income from employment consists of the following two periods:

·         The seven-month period beginning on the 1st January, 2020, and ending on the 31st July, 2020;

·         The five-month period beginning on the 1st August, 2020, and ending on the 31st December, 2020.

Frequency

The tax tables have daily, weekly, fortnightly, monthly and annual categories. The specific category to be used depends on the frequency of remuneration.

Taxable Income

The specific bracket to be used under the selected category depends on the employee`s taxable income. It is thus important to accurately compute the taxable income from employment as guided by the relevant legislative provisions.  Once the aforementioned indicators are applied correctly, one can go ahead to follow the examples shown on the right side of each tax table. For illustration purposes, two examples are shown below.

1.    Computation of PAYE for August 2020 for an employee who earns RTGS 25,000.00 monthly

Below is an extract from August- December 2020 RTGS tax tables

	Monthly Table	Example
	Rates	If an employee earns
From	–	to	5,000.00	Multiply by	0%	Deduct	0	$80 200 per month
From	5,000.01	to	15,000.00	Multiply by	20%	Deduct	1,000.00	The tax will be calculated thus:
From	15,000.01	to	30,000.00	Multiply by	25%	Deduct	1,750.00
From	30,000.01	to	60,000.00	Multiply by	30%	Deduct	3,250.00	$80 200 x 35% – $6 250 =
From	60,000.01	to	100,000.00	Multiply by	35%	Deduct	6,250.00	$21,820.00 per month
From	100,000.01 and above	Multiply by	40%	Deduct	11,250.00

Application of the above ZW tax table: The bracket for $25000 is as follows:

From

15,000.01

to

30,000.00

Multiply by

25%

Deduct

1,750.00

PAYE will be (25,000.00*25% – 1,750) which is RTGS $4,500.00

2.    Computation of PAYE for August 2020 for an employee who earns USD 250 weekly

Below is an extract for August- December 2020 USD tax tables

	Weekly Table	Example
	Rates	If an employee earns
From	–	to	15.91	Multiply by	0%	Deduct	0	$60 per week
From	15.92	to	68.18	Multiply by	20%	Deduct	3.18	The tax will be calculated thus:
From	68.19	to	227.27	Multiply by	25%	Deduct	6.59
From	227.28	to	454.55	Multiply by	30%	Deduct	17.95	$60 x 20% – $3.18 =
From	454.56	to	681.82	Multiply by	35%	Deduct	40.68	US $8.82
From	681.83 and above	Multiply by	40%	Deduct	74.77

Application of the above USD tax table: The bracket for USD250.00 is as follows:

From

227.28

to

454.55

Multiply by

30%

Deduct

17.95

PAYE will be (250.00*30% – 17.95) which is USD $57.05

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