Antigua and Barbuda operates a structured tax system that requires employers to manage various payroll-related obligations, including withholding income tax from employees and contributing to national social security schemes. Navigating these requirements accurately is crucial for businesses operating within the country to ensure compliance and avoid penalties.
The fiscal year in Antigua and Barbuda aligns with the calendar year, running from January 1st to December 31st. Employers are responsible for understanding and implementing the rules regarding income tax, social security, and other mandatory contributions for all employees, whether resident or non-resident, earning income from employment in the country.
Employer Social Security and Payroll Tax Obligations
Employers in Antigua and Barbuda are required to contribute to and withhold contributions for several national schemes from employee salaries. These include the Social Security Scheme (ABSSS), the Medical Benefits Scheme (MBS), and the Education Levy. The employer is responsible for remitting both their own contributions and the amounts withheld from employees to the relevant authorities.
Contribution rates and ceilings are subject to change, but based on current legislation applicable for 2025, the rates are as follows:
| Contribution Type | Employee Rate | Employer Rate | Contribution Ceiling (Monthly) | Contribution Ceiling (Annually) |
|---|---|---|---|---|
| Social Security Scheme | 3.5% | 5.5% | XCD 6,500 | XCD 78,000 |
| Medical Benefits Scheme | 2.5% | 3.5% | XCD 6,500 | XCD 78,000 |
| Education Levy | 1% | 1% | XCD 6,500 | XCD 78,000 |
These contributions are calculated on the employee's gross salary up to the specified monthly or annual ceiling. Income exceeding the ceiling is not subject to these contributions.
Income Tax Withholding Requirements
Employers are mandated to operate the Pay As You Earn (PAYE) system, withholding income tax from employee remuneration on a monthly basis. The amount of tax to be withheld depends on the employee's taxable income, which is calculated after deducting eligible allowances and deductions, and the applicable progressive tax rates.
The income tax rates applicable for 2025 are structured as follows:
| Monthly Taxable Income | Annual Taxable Income | Tax Rate |
|---|---|---|
| Up to XCD 4,166.67 | Up to XCD 50,000 | 0% |
| XCD 4,166.68 to XCD 16,666.67 | XCD 50,001 to XCD 200,000 | 10% |
| Exceeding XCD 16,666.67 | Exceeding XCD 200,000 | 25% |
Employers must correctly calculate the taxable income for each pay period and apply the corresponding tax rate to determine the amount of PAYE to be withheld.
Employee Tax Deductions and Allowances
Employees are entitled to certain deductions and allowances that reduce their gross income to arrive at their taxable income. The primary allowance available to all taxpayers is the personal allowance.
- Personal Allowance: For 2025, the personal allowance is XCD 50,000 per annum, equivalent to XCD 4,166.67 per month. This amount is subtracted from the employee's gross income before calculating income tax.
- Other specific deductions or allowances may be available under the tax legislation for items such as certain medical expenses or contributions, which further reduce taxable income. Employees are typically required to inform their employer of eligible allowances to ensure correct PAYE calculation.
Tax Compliance and Reporting Deadlines
Employers must register with the Inland Revenue Department (IRD) and the Social Security Scheme. Compliance involves timely calculation, withholding, and remittance of PAYE, Social Security, Medical Benefits Scheme, and Education Levy contributions.
- Monthly Filings: Employers are generally required to file monthly returns and remit the total amounts withheld (PAYE) and contributions due (Employer and Employee portions of SS, MBS, and Education Levy) by the 15th day of the following month.
- Annual Reconciliation: An annual reconciliation of PAYE withheld for each employee must be submitted to the IRD, typically by a deadline in the early part of the year following the tax year (e.g., March 31st). This report summarizes the total remuneration paid, allowances claimed, and tax withheld for each employee during the year.
Failure to comply with registration, filing, and payment obligations can result in penalties and interest charges.
Special Tax Considerations for Foreign Workers and Companies
Foreign individuals working in Antigua and Barbuda are subject to income tax on their income sourced within the country. Their tax obligations and the employer's withholding requirements depend on their residency status and the nature of their employment. Non-resident individuals are taxed only on their Antigua and Barbuda source income, subject to the same progressive rates after applicable allowances.
Foreign companies employing individuals in Antigua and Barbuda may trigger employer obligations even if they do not have a formal permanent establishment in the country. The act of employing staff locally can create a requirement to register as an employer and comply with PAYE, Social Security, MBS, and Education Levy regulations. Specific rules may apply depending on the duration of the work, the nature of the employer's activities, and whether a relevant double taxation treaty exists between Antigua and Barbuda and the foreign company's country of residence. It is important for foreign entities to assess their potential employer liabilities when engaging workers in Antigua and Barbuda.
