Summary of Obligations for Sole Traders
Sole Traders, also called Sole Proprietors are required to file an Income Tax Return for individuals (Non-Emolument) each year.
If income is above $250,000 after three years of commencement of trading (from the date of registration), sole traders are liable to pay Business Levy at the rate of 0.6% on gross revenue or receipts.
Where applicable, Sole Traders are liable to pay PAYE at the rate of 25% on the profits after deducting business expenses and personal allowances. Please note that chargeable profits over $1,000,000 are taxed at the rate of 30%.
A Sole Trader is liable for paying Health Surcharge at the rate of $8.25 per week (or $429 per annum) if below the age of 60 years.
- Like all other business structures, a Sole Trader is responsible for keeping proper record keeping and filing taxes each year.
- PAYE, NIS & Health Surcharge – 15th every month
- Income Tax – 30th April (with the filing of the tax return)
- Business Levy – last day of each quarter (Mar, June, Sep, Dec)
- VAT – 25th day of the month following the VAT period.
Filing your Income Tax return is done usually on April 30th (or the date specified by the Board of Inland Revenue).
If you registered and operated a business for any part of 2020, then filing is mandatory. (even if no transactions occurred and no money made)
Penalties and interest:
For not filing tax returns – sole traders incur $100 every 6 months after the first 6 months. (from November 1st and every six months thereafter)
Late payment of VAT results in a Penalty of 8% and interest of 2% per month.