Employer Tax Contributions

Tax Type	Rate	Base
Personal Income Tax (PAYE)	0% - 15% (progressive, based on monthly income in SOS)	Employee's gross monthly earnings
Social Security	5%-7% or Not mandatory	Employee's gross salary
Corporate Income Tax	0% - 30% (progressive, based on annual income in USD) or 12.3% (standard rate)	Business profits or Annual income
Value Added Tax (VAT)	5%	Most goods and services

Filing & Compliance

• Employers must register with the Somali Revenue Agency (SRA) and obtain a Tax Identification Number (TIN).
• Monthly payroll tax (PAYE) must be calculated, withheld, and remitted to the SRA by the 15th day of the following month.
• Employers are required to file periodic reports detailing total salaries paid and tax withheld, and also annual returns.

In Somalia, employee tax deductions primarily involve Pay As You Earn (PAYE) income tax, calculated based on employee earnings.

Employee Tax Deductions

The primary tax deducted from employee salaries in Somalia is income tax, under the Pay As You Earn (PAYE) system. Employers withhold this tax monthly and remit it to the Inland Revenue Department (IRD). While social security contributions are mentioned in some sources, they are not currently mandatory according to available information.

Income Tax (PAYE)

Income tax rates range from 0% to 18%. The specific rate applied depends on the employee's income level, with higher earners falling into higher tax brackets. More specific details on the income thresholds for each tax bracket are not readily available in the provided sources. For example, one source mentions an 18% tax bracket for salaries above $1,500.

Other Deductions

While not legally mandated, employers may also deduct other amounts from employee salaries with the employee's consent, such as contributions to retirement savings plans or union dues. These would typically fall under post-tax deductions.

Employer Responsibilities

Employers in Somalia have key responsibilities regarding employee taxation.

Withholding and Remittance

Employers must accurately calculate and withhold PAYE tax from each employee's salary every month. They are then responsible for remitting these collected taxes to the IRD. This process currently involves manual submission of payroll summaries to the IRD, which can be time-consuming.

Compliance and Reporting

Employers must maintain accurate payroll records and comply with all relevant tax laws and regulations. They are also responsible for year-end tax reporting, ensuring accurate filing and payment to minimize the risk of penalties.

General Information about Taxes in Somalia

Beyond employee deductions, the Somali tax system includes several other taxes relevant to businesses and individuals. These include:

• Corporate Income Tax (CIT): A 30% tax levied on corporate profits above $30,000 annually.
• Rental Income Tax: A 22.5% tax on monthly rental income exceeding $20,000.
• Withholding Tax: Applies to certain types of payments, such as dividends or interest. Specific rates and thresholds are not available in the provided sources.

It's important to note that this information is based on available resources as of today, February 5, 2025, and may be subject to change due to updates in tax laws and regulations. Consulting with a tax professional or the Somali Ministry of Finance directly is recommended for the most accurate and up-to-date information.