The National Parliament has passed the Income Tax (amended) Bill, 2019 on Thursday 5th December.
The Bill is one of the Democratic Coalition Government for Advancement (DCGA) 100 days priority policy commitment.
Speaking on the closing remark in parliament yesterday, Honourable Harry Kuma, MP and Minister for Finance & Treasury explained that bill will increase the personal tax exemption, also known as the tax-free threshold, from $15,080 to $30,080.
“This will see approximately 2,334 low paid employees become exempt from paying Pay as you Earn or PAYE tax. The increase in PAYE threshold will not only benefits those who earns up to $30,080 per year or up to $1,156.92 per fortnight. It will also reduce the tax burden on the high-income earners as the increase in the threshold will raise the levels at which the various tax rates take effect. It will also make life much easier for all income earners who pay personal income tax as their disposable income will increase,” said Honourable Harry Kuma.
Hon. Kuma stated that the issue of the minimum personal tax exemption is overdue and has recently become more pressing with the recent increase in the minimum wage. The minimum personal tax exemption for Solomon Islands has remained unchanged for almost a decade and it has been the lowest in comparison to other tax jurisdictions within the Pacific region. By raising the personal income threshold, it improve incentives for Solomon Islanders to work, save and invest. This is expected to boost economic activity in the country.
“Whilst the reform creates cost for Government by reducing the amount of revenue that can be directly collected, this single tax amendment is the most direct way of translating economic growth to ordinary wage earners and their family”, elaborated Hon. Kuma.
The Minister for Finance & Treasury further explained that given the policy implications of this bill, the Government would like to urgently commence this piece of legislation on 1st of January 2020. Officials within the Ministry of Finance and Treasury are ready to assist businesses in Solomon Islands to implement the changes on the first day of year 2020.