Direct taxes are levied directly on the income, property, or wealth of individuals and corporations. Personal Income Tax is typically structured progressively across multiple tax brackets. To ensure high compliance and consistent cash inflows, governments use the PAYE mechanism. Employers are legally mandated to calculate, deduct, and remit income taxes from employees’ monthly salaries directly to the revenue authority.

Corporate Income Tax is levied on the net profits generated by businesses within the fiscal year. Computing taxable corporate profit requires adjusting accounting profits (from financial statements) for statutory allowances, non-deductible expenses, and capital depreciation adjustments allowed under the national tax code. Governments often deploy corporate tax incentives to stimulate targeted sectors, though this must be balanced against the risk of eroding the tax base.