At the end of each calendar year, employers are required to give to each employee and IRB a statement (Form CP8A/EA) showing the total remuneration paid for the year and the amount of tax deductions made.

Although a schedule is provided by the Inland Revenue Board, the system uses a pre-determined formula that exactly reflects the said schedule.

The processing steps for determining tax deductions are:

• Employers must determine the employee’s tax category based on his/her marital status and the number of dependants. There are three of these categories:

• Category 1 (Single persons and married women)

• Category 2 (Married men with non-working wives)

• Category 3 (Married men with working wives / divorced women with dependants).

• For this purpose, "dependant" means:

• an unmarried dependent legitimate child, step-child or child adopted in accordance with any law and who is under 18 years of age;

• if the child is more than 18 years of age, he/she must be undergoing full-time education, and

• a physically or mentally disabled child (for whom there is no age limit).

• The amount of deduction for tax is determined based on the Schedule of Monthly Tax Deductions which is provided by the IRB.

• Where an employee is a divorcee, a widow, or a widower, and pays for the maintenance of the children, Category 3 of the schedule applies.

• Where that employee has no children, Category 1 applies.

• Determine the tax reliefs :

• Marriage allowance

• Spouse relief

• Wife rebate

• Single allowance

• Dependant allowance

• Self rebate

The result of this process is only the taxable income only. To get the tax payable, a formula is applied to the taxable income.