Employer Tax Contributions

Tax Type	Rate	Base
PAYE (Income Tax Withholding)	0% - 25%	Employee Gross Income
National Retirement Fund (TNRF)	5%	Employee Gross Salary
Consumption Tax (CT)	15%	Taxable Supplies/Imports

Filing & Compliance

• Monthly PAYE and TNRF Remittance: By the 15th day of the following month.
• Monthly Payroll Reports: Submitted with remittances.
• Annual PAYE Reconciliation (Form 8) and Employee Statements (Form 4): Due by March 31 of the following year.

In Tonga, employees are taxed on their gross income, meaning no deductions are allowed. The tax rates are progressive, ranging from 0% to 25% based on income brackets.

Employee Tax Withholding

• No Deductions: Tonga's tax system does not allow any deductions for employees. Income tax is calculated based on the employee's gross employment income, which includes salary, wages, bonuses, allowances, and benefits.
• Tax Rates (Effective July 1, 2021):
  • TOP $0 - $12,000: 0%
  • TOP $12,001 - $30,000: 10%
  • TOP $30,001 - $50,000: 15%
  • TOP $50,001 - $70,000: 20%
  • TOP $70,001 and over: 25%
• Example: An employee earning TOP $60,000 annually would have their tax calculated as follows:

(TOP $12,000 * 0%) + (TOP $18,000 * 10%) + (TOP $20,000 * 15%) + (TOP $10,000 * 20%) = TOP $6,800

Employer Responsibilities

• Withholding: Employers are responsible for withholding the correct amount of PAYE (Pay As You Earn) tax from each employee's gross pay.
• Remittance: The withheld tax must be remitted to the Ministry of Revenue & Customs, accompanied by the appropriate forms.
• Tax Withholding Certificate (Form 4): Employers must provide each employee with an Annual Tax Withholding Certificate (Form 4) within 14 days of the end of the financial year. This certificate details the employee's gross income and the total tax withheld during the year.
• Monthly Tax Withholding Returns (Form 7): Employers are required to file monthly tax withholding returns, listing each employee's gross wages and the amount of PAYE withheld.
• Annual Tax Withholding Reconciliation (Form 8): At the end of the financial year, employers must file a reconciliation of all monthly PAYE returns (Form 8), along with a copy of each employee's Form 4.

Employee Tax Refunds and Short Payments

• Refunds: If the tax withheld exceeds the actual tax liability, employees can apply for a refund using Form 9 (Withholding Tax Application for Refund), attaching a copy of their Form 4.
• Short Payments: If the tax withheld is less than the actual tax liability, the employee is responsible for paying the difference. The Ministry of Revenue & Customs will issue a demand letter outlining the shortfall and any applicable penalties.

Additional Taxes

• National Retirement Benefit Scheme: Both employers and employees contribute 5% of the employee's earnings to the National Retirement Benefit Scheme.

As of today, February 5, 2025, this information is current, but tax laws and regulations are subject to change. It's always recommended to consult with a tax professional for the most up-to-date advice.