Skills and Development levy (SDL) is a levy imposed on the employer based on the gross monthly emoluments of employees. It is not a tax on the individual but a cost to take into account when considering the overall cost of employment. It must not be deducted from the salary of the employee.

How is it calculated?

SDL is calculated as 3.5% of gross monthly emoluments of all the employees.

Emoluments includes basic salary, and other allowance which are payable to the employee.

The term employee in this context includes both the permanent employees, temporary and casual laborers, and other persons employed.

What kinds of businesses are eligible for SDL?

SDL is only applicable to employers who have a minimum of 10 employees. You do not pay SDL if you have less than 10 employees.

Does SDL apply to NGOs?

SDL does not apply to charitable organization. Of course, even an NGO is a charitable organization. But this exception is not automatic.

In order to be exempted from paying SDL as a NGO you must earn a status to be recognized as a charitable organization.

You must meet the following two conditions in order to qualify for a status of charitable organization.

The first condition concerns the nature of the activities you provide. Only NGOs established to pursue the following objectives will be eligible:
i. Relieving poverty or distress of the public;
ii. Providing education or public health.

The second condition is to obtain an approval from the commissioner general of TRA. The commissioner general will only approve after been satisfied that the business you conduct is for public good.

Does the amount paid as SDL qualify for tax deduction?

The amount which you pay as an employer for SDL qualifies as a deduction when calculating the chargeable income tax.

When and how to pay SDL?

SDL is collected by TRA. You must make a return directed to a commissioner general of TRA by filing the prescribed form.

SDL is payable on a monthly basis. You must file the return on or before the 7th of every month which concerns the preceding month. In other words, you’re required to pay SDL within seven days after the end of the relevant month.