Employer Tax Contributions

Tax Type	Rate	Base
PAYE (Income Tax)	Progressive (11% to 40%)	Employee's Taxable Income
SINPF (Employer)	7.5%	Employee's Gross Salary
SINPF (Employee)	5%	Employee's Gross Salary

Filing & Compliance

• PAYE and SINPF contributions must be remitted monthly.
• Monthly PAYE returns are due by the 15th of the following month.
• Annual returns detailing employee earnings, PAYE withheld, and SINPF contributions are due by March 31st following the tax year.

In the Solomon Islands, employee tax deductions are primarily handled through the Pay-As-You-Earn (PAYE) system, where employers deduct income tax directly from employee salaries and wages. Several other deductions and exemptions influence an employee's final tax liability.

PAYE Income Tax

• Taxable Income: Includes salary, wages, overtime, leave/sick pay, commissions, bonuses, allowances, and non-cash benefits such as housing.

• Tax Rates for Individuals: As of 2025:

  • $1 to $15,000: 11%
  • $15,001 to $30,000: $1,650 + 23% of the excess over $15,000
  • $30,001 to $60,000: $5,100 + 35% of the excess over $30,000
  • $60,001 and over: $15,600 + 40% of the excess over $60,000

• Example: An employee earning $20,000 annually would have a $1,650 + 23% of ($20,000 - $15,000) = $2,800 annual tax liability.

Exemptions and Deductions

• Personal Exemption: $15,080. This exemption is prorated if employment is for less than a full year.
• Interest Income Exemption: The first $5,000 of interest income from savings or fixed deposit accounts is exempt.
• Other Deductions: Alimony payments are deductible. Normal business expenses are deductible for self-employed individuals and business owners.
• Tax Incentives: Tax holidays and exemptions may be granted depending upon the nature and type of the business, often ranging from 3 to 10 years for specific industries like tourism and export-oriented businesses.

Employer Responsibilities

• PAYE Deductions: Employers must register with the Inland Revenue Division (IRD) and deduct PAYE tax from employee payments.
• Annual Certificates: Provide employees with annual tax certificates and submit copies to the IRD by January 31st.
• Example: For a fortnightly paid employee earning $769, the employer deducts PAYE using the fortnightly tax table, which incorporates the $15,080 annual exemption.

Employee Filing Requirements

• Employees generally do not need to file a tax return if the correct amount of PAYE was deducted and they have no other income sources.
• Filing is required if:
  • Income was received from other untaxed sources.
  • Income from dividends, director's fees, and interest exceeded $10,000.
  • PAYE deductions were incorrect.
• The IR20 form is used for employee tax returns.
• Refunds for overpaid tax are directly deposited into employee bank accounts.
• Notices of Assessment are issued for underpaid tax, with specified due dates.

Additional Information

• Corporate Tax: Resident companies are taxed at a flat rate of 30%, while non-resident companies pay 35%.
• Total Tax Rate: As of 2019, the total tax and contribution rate for businesses in the Solomon Islands was 32% of profit.

This information is current as of February 5, 2025, and may be subject to change. Consult with the Solomon Islands Inland Revenue Division for the latest details.