Employers are typically responsible for several tax-related duties. One of these is the Pay-As-You-Earn (PAYE) system, where employers are likely responsible for deducting income tax from employee wages and salaries.

PAYE (Pay-As-You-Earn)

Under the PAYE system, employers deduct income tax from employee wages and salaries. This system is common in many countries, and while specifics may vary, the general principle remains the same.

Social Security Contributions

Another responsibility that may fall on employers is contributing to a social security scheme on behalf of their employees. This often involves making regular payments into a fund or program designed to provide financial support to employees in various circumstances, such as retirement, disability, or unemployment.

Corporate Income Tax

If your business is a registered entity, you will likely be liable for corporate income tax on profits. This tax is typically levied on the net income of the company and is a significant part of an employer's tax responsibilities. The specifics of corporate income tax can vary greatly depending on the jurisdiction and the nature of the business.

Employee earnings are typically subject to certain deductions. Two of the most common deductions are income tax and social security or pension contributions.

Income Tax

Most countries have a form of income tax deducted from employee earnings. The amount of income tax deducted usually depends on the employee's income level, with higher income levels generally attracting higher tax rates.

Social Security/ Pension Contributions

Employee deductions to fund social security or pension schemes are also common. These deductions are typically a percentage of the employee's earnings and are used to provide income for the employee upon retirement. The exact percentage deducted can vary depending on the specific social security or pension scheme in place.

Finding Reliable Information

For accurate and up-to-date information on employee tax deductions, the best source is usually the local government tax office. They can provide detailed information on the specific tax regulations in place, including the rates of income tax and social security or pension contributions.

Saint Helena, Ascension, and Tristan da Cunha currently do not have a Value Added Tax (VAT) system in place. The government primarily raises revenue through other forms of taxation, including income tax, import duties, and excise duties. A VAT system can be complex to administer, especially for small territories with limited resources. Additionally, introducing a VAT could increase the cost of goods and services for consumers and potentially impact businesses.

Key Factors for VAT Implementation

If these territories consider implementing a VAT system, there are several key factors to examine:

• Revenue Potential: VAT can be a significant source of tax revenue for governments. A feasibility study would be needed to determine the potential yield in this territory.
• Administrative Burden: Implementing and managing a VAT system requires resources and expertise. The government would need to assess its capacity to handle this.
• Impact on Businesses: Businesses would need to comply with VAT regulations, potentially increasing their administrative costs.
• Consumer Prices: VAT is a consumption tax, ultimately passed on to consumers, potentially leading to higher prices.
• Social Equity: The government would need to consider measures to mitigate the potential regressive impact of VAT on lower-income households.

For authoritative information, the Government of Saint Helena, Ascension and Tristan da Cunha, and International Monetary Fund (IMF) Reports on these territories can be referred to.

To encourage exports, businesses engaged in the export of goods and services are offered a reduced corporate tax rate of 15%, down from the standard 25%. This incentive also extends to businesses producing goods considered key import substitutes.

Reduced Self-Employment Tax Rates

Self-employed individuals engaged in the same qualifying export-oriented and import substitution activities enjoy a 5% reduction in Self-Employment Tax rates.

Time-Bound Incentives

These tax incentives for reduced Corporation and Self-Employment Tax rates are currently in effect from 1 April 2019 to 31 March 2024.

Additional Considerations

The government may periodically identify specific priority sectors for further targeted incentives. Businesses need to meet specific requirements to qualify for these tax incentives.