1. Changes in the PAYE tax exempt band

With a view to increase the disposable income of individual taxpayers, the monthly income tax exemption threshold for Pay-As-You-Earn (“PAYE”) was increased from K4,000 to K4,500 effective January 2022. This will result in a maximum annual incremental take home pay for individuals by K1,500 (K125 per month).

2. Revision of NAPSA Contribution ceiling

The National Pension Scheme Authority (NAPSA) has increased the contribution ceiling from K23,188 in 2021 to K24,436. The contribution ceiling is the maximum amount upon which NAPSA deduction can be applied from the employee’s salary. Any amount beyond that is not subject to NAPSA contribution.

Hence, the maximum employee monthly statutory contribution deductible for the year 2022 is K1,221.80 (2021: K1,159.40) which is 5% of the contribution ceiling. This entails that the maximum monthly contribution payable by employers is K2,443.60 constituting 5% employee share and 5% employer share.

For purposes of making social security contributions to NAPSA, earnings refer to any benefit given by an employer in exchange for the employee’s service, including basic salary, allowances, bonuses, commission, severance pay, overtime allowance, leave allowance, commuted leave days and other allowances.

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