What is this and how does it work?

The FSS is a methodology system for tax deductions created to provide accurate deductions from emoluments. This system mainly ensures that correct amount of tax is deducted thus reducing the possibility of large amount of refunds or tax bills arising at the end of the year of tax assessment. The FSS also prescribes other administrative obligations by the employers.

The FSS applies to :

• Wages
• Pensions
• Director’s fees
• Overtime
• Fringe Benefits
• Long services awards
• Performance bonus
• Statutory bonus

The FSS Timeline

1. On the commencement of any employment, an FS4 is filled detailing important details related to the employee who will help with the calculation of tax such as what computational rates to use, deduction methods etc.
   
2. FS5 has to be submitted on a monthly basis to the CIR and must include: (i) the number of employees ;(ii) total amount of tax deducted and (iii) gross amount of emoluments paid to employees
   
3. FS7 has to be submitted on a yearly basis to the CIR which is a summary annual statement of FS5 submitted during a given year.
   
4. The employer also has to give an annual statement to each employee via the FS3 form.

Taxation of employed Individuals

• Employees tax payable will be deducted from their gross pay and remitted to the CIR by their employers via the FSS system
  
• Tax payable for the year would have been paid through the FSS system.
  
• If a balance arises due to or by the CIR, such balance is settled when the employee files their personal tax return.