Although it is not yet official, a recently leaked government communiqué indicates there will be an increase in the income tax threshold from the 1st of July this year.
It is expected the threshold will increase from P36, 000 to P48, 000 a year.
It means anyone whose monthly earnings are P4, 000 or less will not have to pay income tax. The present cut-off point is P3, 000.
Further breaking it down for Voice Money, Managing Tax Consultant at Aupracon Tax Specialists, Jonathan Hore explained, “To those who pay tax, it will reduce tax a bit as the non-taxable threshold increases to P48, 000 from the current P36, 000.”
He noted such a move effectively recognizes that the P3, 000 per month, in place since 1 July 2011, was now too low.
Indeed, Hore admitted there are those who feel the adjustment is not enough and that P6, 000 (or P72, 000 per annum) would be a more adequate figure, especially given the current Covid-19 chaos.
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“But it is a move in the right direction as it will reduce tax and give back some tax to the public. If it is to be effected, it will only be from 1 July 2021,” stated the tax specialist.