On rental income (s): This is referred to income (s) received from rented property, either through residential or on commercial rents basis. Therefore, rents received on residential premises (property) are assessed separately at the 10% per centum rate of the overall gross income received from the rents, whereas rents received on commercial rents are added to other incomes earned and assessed on global source (s) together.

This as a result will lead to 1/6 of the rent received being allowed as deductions in the computation of the chargeable income accrued/ or earned from its global source. For information regarding computation of rental income, please follow us in our subsequent editions with the ‘Business and Finance Column, every Thursday for more holistic and digestible information/ or views of rental income and its ‘modus operandi’, in The Gambia; and as administered and provided by the Income and Sales Tax Act 2004.. On fringe benefits:  This tax is payable by the employer at the applicable rate of 35% of the total taxable benefits.

It covers a whole range of benefits, ranging from rent-free accommodations, use of company vehicles, household personnel, loan of less than market value, discounts on sale of goods or services, life and health insurance premiums, meals, entertainment expenses, membership dues, childcare and household expenses. Special regulations on different types of benefits are applicable.

Dividends as it implied name deals with the shares of a company’s profits divided among shareholders either on a quarterly, sixth monthly or on an annual basis, after the closing stock of a company’s yielded investment (s), as agreed by its shareholders. Therefore, dividend income and interest received by a Trustee, executor and administrator is subject to withholding tax, which will be considered as final tax on that income.

In this regard, any amount deducted from the payment of interests or dividends and not paid over to the collector of taxes will appear as a liability in the Balance Sheet of the submitted Profit and Loss Account of the declaring payer (s).
 
Business incomes
Business income refers to any form of income (s) received from any type of business (es) activities wholly registered and doing business in The Gambia’s tax jurisdiction.

In addition to this, section 16, page 34 of the Income and Sales Tax Act, 2004 define Business Income as any profit or gain arising from business. It could be any income derived either from all geographical sources or from a Gambian-source income (s). The tax that constitutes both a business and employment income (s) is referred to Personal Income Tax(PIT). It is a tax type on the different types of taxes administered by the Domestic Taxes Department (DTD) of the Gambia Revenue Authority.

Consequently, in computing Business Income, consideration is given on the net business income, profit or losses made and for which unallowable deductions are, add back on the gross income, less the exempted incomes. However, on the final analysis, a vivid picture of the Assessable Income and for which allowable deductions are less, such as capital Allowances, other deductions and Losses brought forward is communicated clearly, for ease of reference on the supposed or due tax to be paid. Upon adding, the total allowable deductions will result to the Chargeable Income that is either tax at rates in the first schedule or tax on turnover of the business income of either the 2% on the audited account or 3% of turnover of unaudited account or 35% of the taxable profits.

Consideration is taking on whichever is greater options for either the 2%/ or / 35% or the 3% tax rates on turnover of Business Income. The rationale for the application of different tax rates on the computation of business income (s) is to desist Companies or Individual businesses from the practicing norm of false/ misleading and unnecessary deductions not allowable in the computation of business income (s), and to encourage them to employ the services of registered and competent Auditing Firms. Interestingly, in the form a section deals with the summary of Capital Allowances, that labour on the total current year capital allowances, additional capital allowances, utilised capital allowances utilised for the current year and unutilised capital Allowances carried forward.

More so, type of income, ain or payment receives in lieu to residential rent income, Dividend, interest, income from Trusts, Capital Gains and Fringe Benefits. These forms are explicit and are to be filled-in properly as a means of providing the necessary information, regarding all the income (s) and profits earned or received in the span of business operations.  Remember, constantly declaring business losses periodically is a form of using the tax avoidance scheme on the extreme of lesser paying minimal tax (es) on your Business Income. If this is a practicing norm, please cease immediately and declare the correct sources of profits made and the necessary expenses incur during your business income for the past year. This will position your business on a high premium of tax integrity and compliance in responding to the due dates of return (s) submissions, declarations and payments.

As an employer, can I devise my own form in furnishing information of my already computed withheld staff payroll tax? Indeed, the Domestic Taxes has designed a Form called F 26, and can be requested either on an electronic or manual copy (ies) for ease of properly inscribing the information pertaining the salaries and deducted taxes, staff names and positions in the company (institution). Do I need to provide information regarding new employed employee (s) to the Tax Office. Yes, as an employer or payer of withholding tax (es), you are obliged to furnish to the Tax Office of any newly employed employee (s) joining your institution/ company and even of those parting company with your institution/company. What can I do as an employee if my employer fails to remit my deducted taxes to the Tax Office? The answer is simple, for which as an employee knowing your tax status is obligatory and your civic responsibility.

Therefore, in the event that you have realised that your employer is not furnishing your deducted taxes, you are obliged by the Tax laws to report it to the Tax Office for necessary action and avoid being subjected in bearing the burden of taxes in the event of requesting for tax clearance or other necessary documents. What is the justification of employees bearing the burden of taxation in the event their employers fails to remit the deducted and withheld taxes to the Tax Office. The legality on the discretion used by the Tax Office in making employees bearing the burden of tax payments in the event they need vehicle clearance to enable them registered and be issued with road tax and license is a strategy to put enormous pressure to their employers; regarding payment of deducted taxes to the Tax Office and on time. 

Withholding tax is widely cited as an endemic and ensuring problem where non-compliance is rife and rampant. To this, the high rate of non-compliance can be attributed to a number of reasons and is a growing cause of concern that needs an urgent attention to address its causal and triggering effects towards GRA’s drive for a sustained domestic revenue mobilisation and administration.

The reasons for non-conformity to the rules of Withholding tax by payers and Agents in The Gambia obvious and these are:
a. Lack of tax knowledge/ education being provided to the taxpayer (s), especially employers on the rationale of withholding tax, computation, procedure and processes;
b. Behavioural/intentional attitudes to non-compliance of taxpayers regarding tax payments;

c. The extreme usage of the tax avoidance schemes by employers in diverting deducted and supposed withheld taxes towards other operational use of the company/ institution, in terms of staff salary payments or re-investing it for a sustained productive growth.
It is in light of these expectations that taxpayers and in particularly Withholding Tax Agents and Payers (Employers) needs to know the strategic importance of paying taxes; regarding the remitting of tax withheld.

The contribution of withholding taxes in domestic mobilisation can be seen in enormous weights for which government cash flow improves constantly. Taxpayers knowing fully their rights and obligations to tax payments will go a long way in assisting them to understand the importance of paying taxes. In light of the above, it is critically important that assistance be provided to taxpayers in becoming more tax-oriented, concern and compliance. This is because the effects of punishments regarding non-compliance to tax obligations are very high and the tendency of intending to remain outside the ‘tax net’ is minimal.

Note:  Gross Income according to section 15, (1) of the Income & Sales Tax Act is the total amount of – 
a. Business income;
b. Employment income;
c. Property income; and
d. Any other income not mentioned in paragraphs (a), (b) and (c), derived by the person (s) during the year, other than income
(s) exempt from income tax.
In conclusion, withholding tax is tax charged on gross income derived either from all geographical income
(s) of a resident person or from Gambian-source Incomes by a non-resident person based on the tax schedules. The computation of withholding tax and the applicable rates are assessed differently from each other, ranging from employment income, capital gains, fringe benefits, interests and dividends, due to their sharp difference and mode of computations.

Therefore, WHT is a tax that is levied on the gross income received from either management fees, consultancy and Director’s fees, dividends, interests, royalties and trusts received or paid. In fact, to avoid (WHT) from becoming a chronic tax debt/ arrears, a burden that is problematic to collect and administer due to the seemingly perception of taxpayers, regarding tax payments can be solved through on an unending communication and involvement strategy of taxpayers being constantly engaged in the tax system.

Finally, avoiding the scheme of being charged penalties and interests for tax offences from Withholding taxes can best be achieved through ensuring, deducting and paying the taxes withheld from employees incomes and submitting the Withholding Tax returns and on time to the Tax Office. Watch out for next week’s edition on Rental Income, its historical development, rationale and computation in The Gambia. Once again, thanks for the patience and time taken in reading this article. Together we achieve the crusade for an optimal and elastic voluntary compliance advantage through tax education, information and communication. 

The Author is the Senior Compliance Strategy Officer of the Gambia Revenue Authority