1. GRATUITY

Gratuity is a payment made by the employer to an employee at the end of employment in relation to emoluments earned during the period of service. This includes;
a) staff on contract
b) staff on permanent and pensionable conditions of service.

2. TYPES OF GRATUITIES PAYABLE

For tax purposes, there are two broad types of gratuities payable : -
a) to contractual staff
b) to staff on permanent and pensionable conditions of service.

3.THE NECESSARY CONDITIONS TO BE MET FOR GRATUITY TO BE TREATED AS
QUALIFYING

For a gratuity to be treated as qualifying, the following conditions must be met: -
a)payable under a written contract,
b)the contract should be for a minimum period of two years,
c)the gratuity should be payable at the expiry of the contract; and
d)the amount of gratuity should not exceed 25% of the total basic pay earned during the period of the contract.

4. NON-QUALIFYING GRATUITY
Payments that are in excess of the 25% limit as in ( 4 (d )) above and those that do not meet the other conditions above will be treated as “ Non-Qualifying.' more information

1. WHAT IS PAYE?
This is a method of deducting tax from employees emoluments in proportion to what they earn. Under this system the employer is
empowered to: -
a) Calculate tax payable by every employee
b) Deduct the tax due from the emoluments, and
c) Accounts for the tax deducted to ZRA.

2. WHAT ARE EMOLUMENTS?

For tax purposes, the term “emoluments'' means total earnings of an employee from employment.These include wages, salaries, overtime, leave
pay, commissions, fees, bonuses, gratuities and any other payments from employment or office. more information