FAQ’s
FAQs on Domestic Taxes
A. Pay As You Earn (PAYE)
Q1. What is PAYE?
A1. P.A.Y.E. means Pay-As-You-Earn and has the same connotation as Pay-As-You-Go (P.A.G.O) as in other Tax jurisdictions. It is the deduction of personal income tax withheld from payment of emoluments to employees by employers and remitted to government coffers. Similar deductions can also be made from equity holders and service providers when they are paid dividends, interests and contract fees.
Q2. What are the employees’ income tax rates?
A2. The applicable personal tax rates are as follows:-
Annual Income Brackets Difference Rates
D D D
0 - 7,500 7,500 0% (Threshold/Relief)
7,501 - 17,500 10,000 10%
17.501 - 27,500 10,000 15%
27,501 - 37,500 10,000 20%
37,501 - 47,500 10,000 25%
47,501 AND OVER …………………………. 35%
Q3. Are there any allowances, which are not subject to P.A.Y.E?
A3. All allowances are subject to P.A.Y.E except allowances, which represent reimbursement of expenses incurred in exercising employment duties, subject to a cap or ceiling of D7, 500 per year.
Q4. How can I compute P.A.Y.E?
A4. Add basic salary plus all taxable allowances and use the appropriate tax table.
Q5. Are employees entitled to relief?
A5. Yes. Current personal relief is D7, 500 per year which is zero rated.
Q6. Is an employee obliged to file a Tax Return?
A6. The Commissioner General can by regulation, request an income taxpayer to furnish an Income Tax Return, if he is of the belief that the taxpayer may have other source of income including other employment or non-employment incomes.
Q7. What happens when you have other incomes along with employment income?
A7. Request for a Tax Return Form and declare all the earned incomes for the year and attach relevant documents to support your income declaration and deduction claims.
Q8. How do you check if you have paid the right amount of tax?
A8. Obtain the relevant prescribed Tax Table from your nearest GRA (DTD) office and cross check the tax payable against the earned income.
Q9. What do you do if you think you have paid the wrong amount of tax?
A9. First of all seek clarification to confirm if there exist any genuine over or underpayment of the tax from your local tax office. Make an application using the correct prescribed procedures on a Tax Refund Claim Form with all details including TIN. Advice will be provided if there is the need to claim for a tax refund. However, the Commissioner General can withhold a tax refund to offset liabilities of other tax types.
Q10. What are the consequences for not paying the right amount of tax?
A10. A penalty of 5% per month (or part of a month) of the underpaid tax will be charged during which the failure continues, up to a maximum penalty of 25% of the underpaid tax.
Q11. What do you do to ensure you always pay the right amount of tax each year?
A11. Under the PAYE scheme, always use the relevant ‘Tax Table’ and to adopt the prescribed tax against the corresponding earned income. The Tax Table is a pre-calculated Reckoner, which took care of the allowable claims and tax Relief. Always consult you nearest GRA Tax Office for assistance.
Q12. Do you have to keep Records?
A12. Record keeping in respect of PAYE is incumbent on all Employers and other employees who have other source of income other than their employment income.
Q13. What are your rights?
A13.
i) To claim a tax refund from any excess of tax payment;
ii) To have prompt and quality service delivery from the GRA;
iii) To access relevant information pertaining their PAYE matters.
B. TAX IDENTIFICATION NUMBER (TIN)
Q1. What is TIN?
A1. Tax Identification Number (TIN) is a unique, computer-generated number by GRA used to identify a person for purposes of transacting business with them.
Q2. Who is required to register for TIN?
A2. Any person subject to the payment of any type of tax, filing a Tax Return, opening a Bank account or filing any document at the Registrar General’s Office or making transactions with all stakeholder institutions (In accordance with the fifth schedule of the Income and Sales Tax Act), is required to register for a Tax Identification Number (TIN).
Q3. What are the requirements for TIN registration?
A3. TIN registration requirement is a four-fold tier:-
a) In the case of an individual (Resident and Non-Resident), the following should be submitted:-
i) National ID
ii) Passport or Alien Registration Card; and
iii) Birth Certificate (where available)
b) In the case of Companies:-
i) Certificate of Incorporation
ii) Memorandum and Articles of Association
iii) Copies of Directors’ Identifications such as Passport, National ID, Birth Certificate, Alien Registration Card; and
iv) Copy of Directors’ TIN Certificates
c) In the case of partnerships, Societies and Trusts:-
i) Partners’ and Officials’ Identifications such as Passport, National ID, Birth Certificate, Alien Registration Card
ii) Deed of Partnership (Partnerships)
iii) Copy of Constitution (Societies)
iv) Deed of Trust (Trusts)
v) Partners’, Trusts’ or Officials’ TIN Certificates
d) In the case of body of persons:-
i) The Certificate of Registration, Constitution, Charter or other Document of creation
ii) Officials’ Identification, such as National ID, Passport, Alien Registration Card; and
iii) Officials’ TIN Certificate
Q4. Are there special forms for TIN Registration?
A4. Yes Form IT1/2C is used for Individual personal details; Business, Organisation, or Institution details and general details with a supplementary Form to be filled by Directors and Trustees of Corporate bodies.
Q5. Is there anything else a taxpayer needs to take note of with regards to TIN?
A5. There is a fee of D25.00 for the registration of TIN. TIN-related offences:- A fine of D5,000 or imprisonment of 6 months or both such fine and imprisonment for any person employed in any of the Institutions specified in the ‘Fifth Schedule’ who fails to comply with the provisions of the Income and Sales Tax Act. Also a fine of D20,000 or imprisonment of two years or to both fine and imprisonment for a person who intends to defraud or deceive, provides or indicates to a person and document respectively, a false number purporting to be his or her Taxpayer Identification Number.
C. ASSESSMENT
Q1. What is an assessment?
A1. An assessment of tax is a tax bill raised or notice of tax liability computed from taxpayers’ annual income/profit or a tax bill issued from the Commissioner General’s best judgement in the absence of tax returns. It should clearly state the relief and deductions the taxpayer is entitled in arriving at the tax payable.
Q2. Do I need to pay my taxes even where I dispute the amount in the assessment?
A2. The law provides that the undisputed portion of the tax must be paid. This will also avoid the implication of arrears-accumulation and the accruing of penalty and interest of that part of the tax that is not in dispute.
Q3. What is Self-assessment?
A3. Self–assessment is the system whereby the taxpayer takes responsibility to determine his own tax liability which is payable at the end of each quarter. He computes and calculates the tax based on his turnover/profits and then remits the tax due along with his Tax Return to GRA Domestic Taxes Department.
Q4. What is a due date under the tax law?
A4. It is the date by which Returns are submitted or when the tax due is payable according to the provisions of the income and Sales Tax Act.
Q5. I plan to come back home permanently. Do you tax personal property?
A5. Taxpayers are always expected to pay tax on any income-generated Assets example of the income derived from rental properties, interest and dividends received. Capital Gains Tax will also be levied on personal property sold out.
D. CAPITAL GAINS TAX
Q1. When is Capital Gains Tax chargeable and payable?
A1. Capital Gains Tax is chargeable and payable when there is a disposal of capital asset in the nature of land and building; plant, machinery and equipment; share, security and financial assets; interest in a partnership or any right, title, or interest in an asset referred above. In the case of Individual of body of persons, capital gains tax is charged on the greater of 15% of the capital gains arising from the disposal or 5% of the consideration received on the disposal. But in the case of partnership, company or trustee it is 25% of the capital gains arising from the disposal or 10% of the consideration received for the disposal
Q2. Who is a resident?
A2. a) In the case of Resident Individual:-
i) A resident is an individual who resides in the Gambia at any time in the year;
ii) A resident is an individual who is present in the Gambia for a period of, or periods amounting in aggregate to 183 days or more in the tax year; or
iii) A resident is an individual employee or official of the government of the Gambia posted abroad any time in the tax year.
b) In the case of Resident Company:-
i) A Resident company is the company that was incorporated or formed in the Gambia or;
ii) The control and management of the company’s business is exercised in the Gambia at any time of the year.
E. OBJECTION
Q1. What is an objection and when may I object?
A1. An objection is a disputed tax liability when a taxpayer is dissatisfied with a taxation decision. A taxpayer can object to his tax liability if he is not in agreement with the assessed tax and believes that the tax, penalty and or interest imposed on him needs to be reviewed.
Q2. How do I lodge an objection to an assessment?
A2. An objection must be lodged in completing the prescribed form and shall state fully the grounds on which the objection is made.
Q3. What happens if I don’t object?
A3. If no objection is raised within the time limit (30days), the assessment is final and conclusive and the tax remains payable.
Q4. Can the time limit for objecting be extended?
A4. Yes, an application for an extension of time to lodge an objection can be granted provided the application which should be done in writing is made before the expiry of the time (within thirty days) to lodge an objection.
Q5. What happens if my request for the time limit of an objection to be extended is denied?
A5. Time limit of an objection is part of an ‘objection decision’, and if this decision is refused by the Commissioner General, then the taxpayer may apply to the Tax Tribunal for review of the decision.
Q6 Can I withdraw an objection?
A6. A taxpayer can withdraw an objection if he is satisfied with the objection decision of the Commissioner General.
F. APPEAL
Q1. What is an appeal?
A1. It is the application or request made by a taxpayer to a higher legal authority (High Court) if he is still dissatisfied with the objection decision made by the Tax Tribunal. An appeal to the High Court may be made on a question of law only.
Q2. How do I appeal and is there a time limit for appealing?
A2. A taxpayer should lodge a notice of appeal with the Registrar of the High Court through a written application within 30 (thirty) days after being notified of the decision of the Tax Tribunal.
Q3. Can I add to the grounds of objection when I file the appeal?
A3. The taxpayer may add reasonable cause of objection only after he had filed an objection with the Tax Tribunal with ‘statement of facts’, but cannot in an appeal case with the high Court whose decision will be based on ‘statement of law’ only.
Q4. Can I withdraw my appeal and what is the effect thereof?
A4. Yes one can withdraw an appeal within 30 (thirty) days after being notified of the decision of the Tax Tribunal, which becomes final at the end of that period
G. PENALTIES
Q1. What are the penalties and interest that apply for?
a) Late payment of tax?
i) Late payment will incur penalty of 5% of the amount per month (or part of a month) up to a maximum penalty of 25% of the unpaid tax.
ii) Late payment will incur a computed simple interest in accordance with the prevailing Central Bank discounted rate at the beginning of the first day of the period for which interest is computed and to be increased by 5% points.
b) Under-payment/Under-declaration?
i) In the case of under-payment that was made knowingly or recklessly, a penalty equal to one hundred per cent (100%) of the shortfall (under-payment) OR in any other case, a penalty equal to twenty-five per cent (25%) of the tax shortfall (under-payment) [See Section 207 of the Act]
ii) In the case of under-declaration that was made knowingly or recklessly, a fine not exceeding fifty thousand dalasi (D50,000) or imprisonment for a term not exceeding one year, or to both the fine and imprisonment OR in any other case, to a fine not exceeding thirty thousand dalasi (D30,000) [ See Section 218 of the Act]
c) Non-payment?
i) Non-payment of tax (other than penalty) by the due date is liable for a penalty equal to five per cent (5%) of the unpaid tax per month (or part of a month) during which the failure continues, up to a maximum penalty of twenty-five per cent (25%) of the unpaid tax
ii) Non-payment of tax (other than penalty) by the due date is liable to pay computed simple interest in accordance with the prevailing Central Bank discounted rate at the beginning of the first day of the period for which interest is computed and to be increased by 5% points.
d) Late/Non Return submission?
i) According to Section 203 of the Income and Sales Tax (Amendment) Act,
2007 Gazette Number 9 of 2007, a person who fails to furnish a tax return as required under the Act is liable to a fine of five thousand Dalasis (D5, 000). In addition to this provision according to section 209 of the Act, a taxpayer who fails to furnish a tax return or other document will be fined an amount not exceeding fifteen thousand dalasi (D15, 000) or one per cent (1%) of the tax due per day, the aggregate of whichever is the greater.
e) Failure to deduct, account and pay?
i) A person who fails to deduct, account and pay taxes withheld will be personally charged to bear on him, the tax that should have been paid and legal action may be instituted against him including the disallowance of expenditure of such claim that may have been made in his financial accounts.
ii) Such a person will also have to pay interest according to CBG prevailing rate to be increased by 5% points and penalty of 5% of the unpaid tax per month (or part of a month) up to a maximum of 25% of the unpaid tax.
H. DOUBLE TAXATION
Q1. What is a double tax agreement?
A1 Double Taxation Agreement (Tax Treaty) is an agreement between two foreign governments in providing for tax relief where a person is taxed on the same source of income in a different tax jurisdiction. The agreement can also be on the prevention of fiscal evasion and to provide for reciprocal administrative assistance in the enforcement of income tax liabilities in either country.
Q2. Who qualifies for double tax relief?
A1. One qualifies for this relief if the tax jurisdiction, which has taxed his income, has a Double Taxation Agreement with the Gambia.
I. EXEMPTIONS
Q1. What is tax exemption and who qualifies?
A1. Exemption is an authority granted to a person or body of persons not to pay tax on an otherwise, taxable income.
Q2. What are the requirements to obtain tax exemption?
A2. The requirements are spelled out in Sections 20 to 33 of the Income and Sales Tax Act 2004.
J. PARTNERSHIPS
Q1. What is the current rate of taxation for (straight) business partnerships?
A1. A partnership is liable to tax separately from the partners whose distributed profits are also liable to be taxed as dividends. The current rates of taxation for partnerships are:-
i) 35% of partnership net profits or
ii) 2% of turnover of the partnership audited accounts or
iii) 3% of turnover in any other case
Q2. Does taxation start from the date of registration of the partnership? If not, when?
A2. Taxation starts from the incorporation or formation of the partnership business. Partnership should file partnership returns, but not separately.