Basis for calculation of national insurance contributions


The National Insurance Institute calculates national insurance contributions in accordance with the income of the self-employed person from the sources enumerated in Section 2(1) and Section 2(8) of the Income Tax Ordinance pertaining to the tax year for which the national insurance payments must be made. Self-employed persons declare their estimated income in the multi-year report form. The amount of the monthly payments of national insurance contributions is determined in accordance with this income or in accordance with the most recent tax assessment in the National Insurance Institute offices. This declaration will be referred to henceforth as a “declaration pertaining to income.” The payments are determined in accordance with income and might change in accordance with changes in the average wage. On receipt of the final tax assessment from the Income Tax Authority for a self-employed person, the NII recalculates the annual national insurance contributions that he must make and informs him of the differential – whether to his credit or to the NII’s credit – if such differential exists.