Tax Information

E-Tax information

From 12 September 2018 IRD has introduced it’s new E-Tax system which provides the ability to file and pay online to it’s customers.

You can find more detailed information on E-Tax in the following publications:

Changes to the Personal Exemption Threshold

From January 2020, the proposed personal tax exemption threshold for individuals will be increased from $15,080 to $30,080. This means that individuals – both employees and self employed – will not pay tax on the first $30,080.00 they earn.

For any income earnt over $30,080.00 the rates of tax remain the same as set out below:

If you want to find out more about these changes please click on the relevant link below:

  • Self Employed

Employers will need to use new tax tables from 1 January 2012. Inland Revenue can supply you these tables in paper or electronic form or they can also be accessed below:

PAYE Tax Tables

Registration

All businesses and employers need to register with the IRD.

If you are a not-for-profit organisation or charitable trust you may still have tax obligations and need to register with IRD. Please contact IRD for more information.

Businesses

If you are running a business you will need to register for tax purposes. To register please complete the Tax Identification Number Application TAA 1 form for Individuals or TAA 1A form for Non Individuals. IRD will issue you with a Tax Identification Number (TIN). Your TIN should be written on all IRD forms and on any correspondence or other dealings with IRD. Putting your TIN on your payment forms, returns and correspondence will make it quicker and easier to deal with IRD.

TAA 1 form - for Individuals
TAA 1A form - for Non Individuals

Employers

If you employed staff you are required to register with IRD. This includes employing organizations such as NGOs, private schools, and churches. Please complete the Tax Identification Number  Application TAA 1 form for Individuals or TAA 1A Form for Non – Individual and forward to IRD.

TAA 1 form - for Individuals
TAA 1A form - for Non Individuals

Employees

If your only income is from employment you DO NOT need to register with IRD. Your employer will deduct the tax you need to pay through the PAYE system.

Employees

Income tax for employees is collected under the PAYE system. It is an employer’s obligation to deduct tax from your salary and wages and pay it to IRD.

If over the course of a year the correct amount of tax has been deducted from your employment income, and you have no other source of income then you do not have to file a tax return.

If your employer has not deducted the correct amount of tax you are still required to file a tax return with IRD. The form you should complete is called an IR20.

Refunds

If too much tax has been deducted and you are due a refund, IRD will ask you for your bank account details and the refund will be paid direct to your bank account.

Tax to Pay

If not enough tax was deducted from your employment income then IRD will send you a Notice of Assessment that should be paid by the due date shown on the notice.

If you are an employee you still need to file a return in the following circumstances:

  • If you received income from any other source that was not taxed
  • You received income from dividends, director’s fees and interest and the total amount of income from these sources was more than $10,000
  • Your employer did not deduct the correct amount of tax from your income

Employers

If you employ staff you need to register with IRD and deduct and remit PAYE to IRD each month.

You can find out more at our PAYE Section or Additional Guides Below. 

PAYE Section
Changes to the Personal Exemption Threshold

Are You in Business?

In general, you’re in business when:

  • you start charging others for goods and services
  • you regularly sell these goods or services, and
  • you intend to make a profit.

Please refer to “A guide for business taxpayers” below for more information.

A Guide for Business Taxpayers

If you aren’t sure whether your activity amounts to a business, contact Inland Revenue for help.

Key Tax Obligations for New Businesses

1

Register and obtain a Tax Identifier Number (TIN)

2

Keep Business records of income and expenditure

3

Lodge summary forms and returns as required

4

Be on time with your tax returns and tax payments

5

Pay the right amount of tax

All businesses must lodge an income tax return and pay tax on the profits of the business.You may also have other tax obligations such as:

  • PAYE
  • Sales Tax
  • Goods Tax
  • Withholding taxes

The legal entity that operates the business will need a Tax Identification Number-TIN. The most common types of business entities are:

Types of Business Entities

Sole Traders

A sole trader is an individual who runs a business on their own account. A SoleTrader will be registered under their own name and will have one TIN. If they have a business name or trading name, that name will also be attached to the TIN of the individual. They will use their TIN when they are making any tax payments.

Partnerships

A partnership is two or more people carrying on a business together. They share in the profits and losses of the business in accordance with their partnership agreement. Each partnership will have a TIN.

A partnership does not pay tax but a tax return is lodged for the partnership showing the business profits or losses and how they are distributed to each partner.

The partnership’s TIN will be written on the partnership income tax return and also used when paying PAYE, Sales Tax, and Goods Tax etc for partnership activities.  Each partner will have their own individual TIN. They will lodge their own income tax return and pay tax on their share of the partnership profits or losses. They may also pay provisional tax under this number.

Trusts

The trust will have a TIN and the trustee of the trust will need a TIN if they are running a business under the trust.

For more help, please refer to the “Examples of Business Types” below, or contact IRD.

Examples of Business Types

Examples of Business Types

Rex: ‘Rex’s Snack Bar’ & ‘Rex’s auto shop’

Rex starts a small snack bar business at NPF plaza. Rex employs 2 people to help him to run the kitchen and serve customers. Rex also runs a small auto repair business. He does not employ anyone else to help him in this business. He operates this business as a sole trader as well. Rex will need to register as a sole trader.

He will receive on TIN. He will use the same number for payments for both businesses. Rex will need to lodge one income tax return that shows the income and relevant deductions for both businesses. He will lodge this return using his TIN. During the year Rex may also have to make other tax payments such as PAYE, provisional tax and sales tax. Rex will also use his TIN when lodging relevant forms and making these payments.

Irene and George: ‘Accountants Plus’

Irene and George have been working for an accounting firm for many years and decide they would like to go into business together and run their own accounting practice. They form a partnership
whereby they agree to share the profits and expenses of the business on an equal basis. They employ someone to assist with reception duties. They call their business ‘Accountants Plus’.

Irene and George need to register their business with Inland Revenue. They will receive one TIN for the partnership. Irene and George will also receive their own individual TIN. They will use the Partnership’s TIN when making any tax payments for the partnership such as PAYE.

 A partnership does not pay income tax although it must lodge an income tax return showing the income and deductions of the partnership and how they have been shared between the partners. Each partner will have to pay provisional tax and lodge an income tax return. Irene and George will use their own TIN when paying their provisional tax and any income tax payments payable on assessment of their return.

Margaret: Adco Warehouse Pty Ltd

Margaret decides to set up a business importing goods for resale to other businesses and customers in Solomon Islands. Margaret sets up a company to run the business – Adco Warehouse Pty Ltd. Adco Warehouse Pty Ltd employs 3 staff. The company will need to register with Inland Revenue and obtain a TIN. The company will lodge tax returns and pay taxes such as provisional tax, PAYE, Goods Tax etc using the TIN. If Margaret only receives dividends or employment income from the company she will not need to lodge a return or have her own TIN. There are some exceptions depending on the total income Margaret receives from these sources.

Tax Types

These are the types of taxes administered by Inland Revenue Division.

Seminars and Advisories

The IRD runs a Seminar Programme for small businesses. The seminars can help you understand your tax obligations so that you can plan for them, and avoid unnecessary problems in the future. To register for a seminar, please call the Taxpayer Education Team on phone 21493, or visit the IRD office.

View the seminar timetable below for more information.

Seminar Timetable

Exemptions

Section 16 of the Income Tax Act provides for Minister to exempt certain income and people from paying tax. Similarly, section 37 of the Goods Tax Act provides for Minister to exempt certain persons and goods from goods tax. These exemptions provide an opportunity for the government to give limited support by way of tax exemptions to qualifying businesses as one way of encouraging business investment and economic development in the Solomon Islands.

Exemptions, however, cost the government revenue and create distortions in the economy by discouraging businesses or sectors that do not receive exemptions.

To assist the Minister with his decision making guidelines have been established setting out the principles by which application will be considered and a committee set up to consider application and provide advice and recommendations to the Minister. Taxpayers wishing to access the above exemptions need to apply to the exemption committee addressing to Commissioner of Inland Revenue. The Committee meets every two weeks to screen the applications.

There are statutory exemptions available to schools, charitable organizations, and health authorities and government departments. These exemptions can be found in the First Schedule of the Goods Tax Act.

These exemptions are provided for to assist these institutions to better deliver social services to the people. Inland Revenue Division approves these exemptions based on the legitimacy of the application and endorsement from reputable personnel from the authorities.

Tax Rates

Companies

Individuals

Due Date List

Monthly Due Dates

15th

PAYE Summary and Payment

15th

Withholding Tax Summary and Payment

30th

Goods Tax Return and Tax Payment

30th

Sales Tax Return and Tax Payment

Quarterly Due Dates

20 March

First Instalment of Provisional Tax

20 June

Second Instalment of Provisional Tax

20 September

Third Instalment of Provisional Tax

20 December

Final Instalment of Provisional Tax

Annual Due Dates

31 March

Lodge Income Tax Return

30 September

Pay balance of Income Tax due on Assessment

For more information, please refer to A guide to Due Dates below:

A Guide to Due Dates

Filing Obligations

Registration:

Once you are registered for different tax types you will have regular filing obligations.

Registration Information

Due Dates:

Please refer to the Due Dates Table below to find out when your returns should be filed and tax payments made.

Due Dates Table

Tax Types & Taxpayer Guides:

You can find out more about different Tax Types and Taxpayer Guides Below. 

Tax Types
Taxpayer Guides

Payment Options

There are four options for making payments.

Visiting our Offices:

Payments of your taxes can be made at each of our three offices – Honiara, Gizo and Auki. Payment can be made by cheque or cash.

Sending your Payment:

Cheque payment can be sent to our Honiara office. The address is Box G9, Honiara. If you are sending a cheque please ensure you enclose a copy of the accompanying return with the payment.

Bank Agency Payments:

If you need to make payments from a Provincial Centre where we do not have an office, payment can be made through your local bank agent.

Electronic Payments:

If you wish to make tax payments from overseas or it is more convenient for you to pay electronically, please contact us so that we can provide you our bank account details.

WHICHEVER METHOD YOU CHOOSE TO USE FOR MAKING TAX PAYMENTS PLEASE ENSURE YOU ALWAYS REQUEST A GOVERNMENT TREASURY RECEIPT FOR YOUR RECORDS.

Payment of your taxes should be made by the due date. Refer also to Payment Dates below:

Payment Dates

Tax Audits or Enquiries

Inland Revenue has a responsibility to Government and the community to try to ensure that everyone pays the correct amount of tax under the law. This means that from time to time we may need to check the accuracy of information you have given to us.

What is an Audit or Enquiry?

An audit or enquiry involves an examination of your tax affairs to make sure that the information is you have given to Inland Revenue is accurate. An audit or enquiry can take many forms. Sometimes we may need to make an enquiry about a single transaction – other times we may need to audit all your books and records.

An audit or enquiry may involve a phone call or letter asking you to provide further information or verify particular information that you have supplied in your tax return or other tax documents. In other cases it may involve someone visiting you and examining all of your tax documentation for particular years of income or in relation to a particular tax. For example, we may ask to inspect your PAYE records for a particular period or we ask to inspect all your records for all taxes (eg income tax, PAYE, Sales Tax etc).

The enquiry or audit process – what you can expect from Inland Revenue officers

At the commencement of an enquiry or audit officers will:

  • Provide notification of the intention to make enquiries or conduct an audit.
  • (Sometimes we may also carry out unannounced inspections.)
  • provide official Inland Revenue identification when first meeting you
  • Explain the expected nature, scope and duration for the enquiry or audit and indicate the information and records that will be required
  • Tell you about your rights and obligations in relation to the enquiry or audit
  • Give you the opportunity to volunteer information about possible irregularity or omission in relation to your tax affairs. If you do this, the penalties that may otherwise have been imposed may be reduced
  • Allow you to choose someone else to act on your behalf. There are some situations however where you personally must provide information or answers.

During an enquiry or audit, officers will:

  • Explain the purpose of any interview or visit
  • Seek to arrange convenient times and places for any interviews or meetings
  • Ask clear questions
  • Allow you to take notes of any conversations or interviews
  • Give you reasonable time to collect records, documents and papers for examination
  • Answer any reasonable and relevant questions you ask in relation to the enquiry or audit
  • Provide a written receipt for any records that we collect in person at an interview and return the records as soon as possible
  • Make enquiries of third parties with discretion and without any implication of wrong doing by you
  • Allow you to give your views on any relevant issues, including any proposed adjustments
  • Keep you informed of the progress of the enquiry or audit.

At the completion of the enquiry or audit, officers will:

  • Clearly explain the basis of any adjustments made as a result of the enquiry or audit and inform you if any error is detected which has resulted in you paying too much tax
  • Give you the opportunity to explain the circumstances which you believe could justify a reduction of any penalty and/or interest
  • Clearly explain the reasons for, and calculation of, any penalty and/or interest
  • Draw attention to any matters that will help you to understand and meet your taxation obligations in the future

What is expected of you?

If you have been notified of an enquiry or audit, you should prepare for it by reviewing your records and returns.

To meet your obligations under the law you must:

  • Keep records in accordance with the law
  • Provide officers with full and free access to buildings, premises and documents
  • Allow officers to make copies or take extracts of documents
  • Provide reasonable facilities and assistance to officers
  • Provide complete and accurate responses to requests for information

What can you expect from us?

Inland Revenue conducts enquiries and audits in an impartial, fair and professional manner.

The following principles apply to all our work:

If we undertake checks of your tax affairs, it does not mean that we presume you are dishonest in your tax affairs. If the information checked is found to be incorrect, we accept that this may be because you have misunderstood the law or you have made an honest or inadvertent mistake. You may also have failed to take reasonable care or you may have been reckless.

We treat all taxpayers in accordance with the law and we use our powers in a fair, reasonable and professional manner. The officer conducting the enquiry or audit will outline the audit process and,
guide you through the process particularly if you are experiencing an audit for the first time or you are not represented by a professional advisor.

We seek to minimise the cost and inconvenience to you.

How long will it take?

Our aim is to complete the job in the shortest possible time. How long it takes will depend on several factors such as the type of enquiry, the adequacy of your records, the availability of information, the complexity of the matter and the level of your cooperation.

Foreign Investors

Foreign investors are bound by the same tax legislation as local businesses.

Tax Incentives

The Income Tax Act does provide a range of incentives intended to encourage investment in the Solomon Islands.

The power to exempt lies with the Commissioner of Inland Revenue and is discretionary in nature. It is important to note that the government has signalled its intention to address problems created by widespread exemptions with the objective of creating a more level playing field for all businesses. A conservative approach is therefore taken to the granting of exemptions.

An exemption committees has been established to assist the Commissioner undertake his statutory functions. The Committee meets regularly and provides recommendations through the CIR. All applications for incentives should be made to the Chairman of the Exemption Committee.

For further information please refer to our guide below:

Taxpayer Guides

Business Records

Record Keeping

Your basic records or ‘source documents’, show details of all money coming in or going out of your business – money you’ve received or expect to receive, and money you’ve paid or expect to pay. Your source documents contain all the information you need to put into a bookkeeping system.

Income Records

Invoices

Invoices are a good way of recording your sales and keeping track of the money coming into your business. When you sell goods you can issue the buyer with an invoice. There are no special requirements for what a normal invoice should show, as long as it can help prove that a transaction took place.

A normal invoice will show:

  • the seller’s name
  • the purchaser’s name
  • the purchase date
  • the amount paid or to be paid
  • the amount paid or to be paid
  • a description of the goods or services being sold.

Receipt Book

If you make lots of small cash sales to non regular customers a simple way of recording your sales can be to keep a receipt book that details the date of the sale, type of goods sold and the price paid and any discount allowed.

Cash register tape

If your business makes a large number of cash sales then you do not need to record the name of each customer in a cashbook or issue an invoice for every sale. If you make a lot of sales every day, then you can use a cash register and keep the cash register tape as a record of your sales. If you use a cash register tape you need to record all your sales on the tape. You should keep the tapes in daily order and store them with your other sales records. The amount you deposit as cash sales in your cashbook should equal the total on your cash tape and other sales records you keep.

Another way is to record all your sales in a simple day book. You should total up the sales at the end of every day and rule off the book for the start of the next working day.

Expense records

You need to keep records of all your expenses for income tax purposes.

Invoices for purchases

If you buy business goods or services on credit, you will usually be sent an invoice requesting payment. Make sure you keep your invoices for purchases.

Try and separate invoices that you have paid from those that you have not yet paid. Once an invoice has been paid you should record the cheque number on the invoice if you paid by cheque or mark it as paid and store it with your monthly bank statements. Try and keep your records in date order – this will make your end of month balancing easier.

Receipts for purchases

You should also keep a copy of all receipts for cash purchases.

How to record your daily sales and other receipts in a cash book

If you only have a few transactions a day then it is more practical to record every invoice and receipt directly into the cash receipts book.

Use the following steps to record receipts.

  • Step 1: If you have done a reconciliation of daily sales, transfer the amount from item 8 on the reconciliation of daily sales form to the ‘Total receipts’ column in your cash receipts book.
  • Step 2: If you have sold capital items, or have received a refund from a supplier, make a note of it in the appropriate column.
  • Step 3: The money you actually have to bank should match the money your records show that you should have available to bank. If you have less or more money than your records show, record the difference and the reason for this. The amount actually deposited in your bank account should be recorded in the ‘Bankings’ column.
  • Step 4: Every month add up each column in the cash receipts book and record the amount in the ‘Total’ row at the bottom of the form. Transfer the total of the ‘Bankings’ column to the bank reconciliation statement (see below).

How to record payments in a cashbook

Purchases are usually made in cash or by cheque. In some cases, purchases may be provided on credit. The following steps show how to record payments made by cash, cheque or another method in a cash payments book. If the purchase or expense is made on credit or is to be paid at a later date, file the invoice by due date for payment in your files.

Use the following steps to record receipts.

  • Step 1: If you are paying in cash and you use a cash register, take the exact amount of cash from the register and pay the supplier or worker. Put the receipt, or a note with details and the amount paid, in the cash register, or paying by cheque, pay the supplier or worker and note the cheque number on the invoice. Record the date, name of the payee, description of the purchase and the amount of the cheque on the cheque butt.
  • Step 2: If you are using a cash register or day book, at the end of the day record details of cash payments from the register on the reconciliation of daily sales form under ‘Cash payments from cash register or day book’.
  • Step 3: If you are using the reconciliation of daily sales, transfer cash payments to the ‘Total payments’ column in the cash payments book. Don’t include any credit for returned goods, as you record this in the cash receipts book, or not using a reconciliation of daily sales - record amounts of any cheques, cash payments or electronic transactions made from your business bank account in the ‘Total payments’ column in the cash payments book.
  • Step 4: Record the amount of any cash or cheque payments in the column for that type of expense (for example, ‘Materials/stock’ or ‘Motor vehicle’) in the cash payments book. If the payment is for more than one type of purchase, record each portion in its separate column.
  • Step 5: At the end of the month add up each column in the cash payments book and record the total in the ‘Total’ row at the bottom of the form. Transfer the total from the ‘Total payments’ column to the bank reconciliation statement (see below regarding bank reconciliations).

Note:

Once you have transferred the information from your invoices, statements and other transaction documents to your cashbooks, you need to file them – remember, it is a legal requirement that you keep these records for seven years.

Reconciling your cashbook with your bank statement

You should reconcile your bank statement and your cashbooks on a regular basis (at least monthly).

Reconciling is simply matching the amounts of money you have noted down in your cashbook as paid or received against the transactions recorded in your bank account
statements.

Before you start make sure that you have all your bank statements for the period you are trying to reconcile. Your cashbooks should show all the amounts you’ve actually received and payments you’ve actually made. However, there may be some extra transactions that only show up on the bank statements such as: bank fees or interest charges, or direct debits (payments) and direct credits (receipts).

Doing a regular bank reconciliation will allow you to: take into account any extra transactions your bank puts through your account, and check and record any errors or omissions.

Doing regular bank reconciliations will reduce the time it takes you or your accountant to prepare your income tax return and other financial statements.

Four steps for reconciling your bank statements

  • Step 1: Take a pencil and put a tick beside each entry in the cashbooks and bank statement that appears in both records. If there are any differences between the two in relation to particular entries you will need to work out which is correct.
  • Step 2: Add any additional entries that appear in the bank statement (such as bank fees or interest charges) to your cashbook. Your cashbooks should now contain details of every transaction for the period.
  • Step 3: There may still be some entries that appear in your cashbook but not your bank statement. These will be things like a cheque that you have given to someone that they have not yet banked (or is still in the banking process). Sometimes it can take several months for a cheque to be presented. Other transactions might be money that you received on the last day of the month but did not bank it until the following day - it will appear until the next month’s statement.
  • Step 4: To reconcile: record the closing balance as on the bank statement, add any outstanding deposits, deduct any outstanding cheques, and calculate the closing cash book balance (this figure should agree with your cashbook).

Rental Properties

Landlords

For more information on obligations surrounding rental properties for Landlords.

Tenants

If you are a tenant who rents property –whether it be domestic or commercial property – from a landlord you also have tax obligations.

All rental income for the use of buildings and land is subject to withholding tax. This means the tenant must deduct 10% from the rental payment they make to  the landlord. This withholding tax must be paid to IRD by the 15th of the following month.

Changes at IRD- Payments and Penalties

IRD has recently introduced a new computerissed taxpayer account system to better manage and monitor taxpayer’s payment obligations.

You will notice a number of key changes:

  • IRD receipts will now be computer generated
  • Some taxpayers who did not previously have to register with IRD ( stamp duty and withholding tax payers) will now have to register and obtain a Taxpayer Identification Number
  • Late Filing Penalties and Late Payment Penalties will now be imposed automatically when a taxpayer fails to meet their obligations.

For more information on the different penalties that apply please refer to our penalties brochure.

Tax Residency Status

Individuals

An individual is resident for tax purposes if they reside in, or intend to reside in, Solomon Islands for longer than 6 months duration.

Once you are resident for tax in Solomon Islands you are required to pay tax on your world wide income in the Solomon Islands. This means that income earned outside of Solomon Islands is taxable in Solomon Islands and must be included in any return of income filed.

Non resident individuals who derive income from Solomon Islands are still required to pay tax on that income in Solomon Islands.

Non Individuals

A non-individual such as a company, trust or society is resident in Solomon Island if:

  • It is incorporated in Solomon Islands; or
  • It carries out a business in Solomon Islands and has central management and control in Solomon Islands.

Non resident companies who derive income from Solomon Islands are still required to pay income on that income from Solomon Islands

Employing Casual Labour

Casual labour is when someone is informally employed for a short period of time – usually doing low skill or low paid work. Usually the length of time the person is employed is 1 or 2 pay periods for any given job. Industries where casual labour is commonly used include (but are not limited to) construction and stevedoring. It would be expected that the employee’s annual salary would be less than the personal tax exemption of $30,080.

In such situations the employer will not normally be required to deduct tax.

If the employer repeatedly employs the same person for casual work then PAYE should be deducted.

A person may be employed on a casual basis but receive a larger amount of income. This may occur where the work is technical or professional in nature. In these cases, if the level of income received is higher than the personal tax exemption then tax should be deducted.

If an employer is not sure of what to do in their specific circumstance then they should contact IRD.

Changes to Provisional Tax (Non-Standard Balance Dates)

On 1 September 2016 we made some changes to how non-standard balance date taxpayers pay provisional tax. Previously, your provisional tax assessment was paid over four quarters within a calendar year. For example for a March balance date – first instalment due 20 March, second instalment due 20 June, third instalment due 20 September and fourth instalment due 20 December.

This has now changed. Your provisional tax instalments line up with your income tax year. The standard quarterly due dates remain the same (e.g. 20 March, 20 June, 20 September and 20 December) but their order has changed. If your balance date is March for example, instead of your first instalment being due 20 March, it will be due on the first quarterly instalment due date after your income year starts (in this case, 20 June).

Here is a presentation that summarises the changes we have made:

Below are some fact sheets for each non-standard balance date month. Click on your balance date month to see specific information for your situation.

‘Public Notice on TAA start date and Regulations’ and ‘Gazette Notice for TAA start date and Regulations’