ABTAX NEWS May 2015
ABTAX Newsletter
WITHHOLDING TAX ON SPECIFIED SERVICES TO BE IMPLEMENTED JUNE 1, 2015
DO YOU HAVE A DORMANT COMPANY STILL ON THE
Tax Administration Jamaica (TAJ) will implement withholding tax on specified services on June 1, 2015. This will be introduced on a phased basis. The first phase will be limited to Government Ministries, Departments and Agencies, as well as financial institutions regulated by the FSC and BOJ, tourism operators, utility and cable companies, grossing over $500 million will be required to withhold 3% from payments made on specified services on invoice value of $50,000 or more. Individuals and entities who provide services to these named bodies will be subject to the 3% withholding tax . If the invoice is below $50,000 but will add to $100,000 in 30 days, then the 3% will also apply. Persons from whom the tax is withheld are still obligated to file annual and estimated income tax returns and meet their quarterly obligations. They will however be able to claim as an income tax credit, amounts certified as being withheld against their quarterly and final obligations. Any excess credit is refundable on the final return. PENALTY for not deducting and paying over this tax is 50% plus Interest of 30% There are specified forms to be used to file these returns and the certificate that you must issue on deduction. “specified service" includes the following services— Accounting, auditing; catering;, consultancy; decorating;, engineering , architectural, electrical, mechanical and structural, entertainment, information technology, janitorial; laundry; legal; landscaping; management; repairs or maintenance; the rental or leasing of motor vehicles or
BOOKS AT THE COMPANY’S OFFICE? YOU SHOULD TRY TO AVOID THE MINIMUM BUSINESS TAX (MBT) of $60,000 per year. The Company Office of Jamaica presently have a period of amnesty (May 4 TO June 30, 2015) where you can close out dormant companies at a cost of only Three Thousand Dollars ($3,000). PLEASE TAKE ADVANTAGE OF THIS WINDOW OF OPPORTUNITY to avoid paying Minimum Business Tax (MBT) on these.
In This Issue
Withholding tax on specified services
Amnesty for removal of dormant companies at Companies office of Jamaica
Increased Powers of the Commissioner General
Increased Penalties for late or Non-Filing of Returns
Increased Trade or Business Li-
Photo Caption
Income Tax – Withholding Tax on local payments TYPE OF WITHHOLDING TAX
RATE
Withholding Taxes - Interest paid locally
25% of gross
Withholding Taxes - Dividends (Residents)
5% of gross
DISCUSSION QUESTIONS
Withholding Taxes - Dividends (Non-Residents; Treaty *33.33% & 25% of gross rates is applied where necessary) Withholding Taxes - Directors Fee 25% of gross
WHAT ARE YOUR VIEWS CONSERNING THE PRESENT LEVEL OF TAXATION IN JAMAICA?
Withholding Taxes - Pensions
25% of gross
Withholding Taxes on interest -quarterly
25% of gross
WHAT MOTIVATES YOU MOST TO PAY YOUR TAXES? WHAT DO YOU THINK ABOUT THE NEW POWERS OF THE COMMISSIONER GENERAL ?
Income Tax – Withholding Tax on payments to non-residents Country
Canada Caribbean Community Denmark France Germany Israel Norway
Dividends Dividend Sub- Interest Portfolio stantial HoldInvestings ment 15% 22.50% 15%
Royalties Management Fees
Other Sources
10%
12.50%
0
0
15%
15%
15%
15% & 10% 15% & 10% 15% & 10% 22.5% & 15% 15%
10%
12.5%
10%
10%
10%
10%
10%
10%
10%
10%
15%
^10% & 12.5% 15%
15%
12.50%
10%
*33.33% & 25% *33.33% & 25% 10%
5%
8%
10%
*33.33% & 25%
*33.33% & 25% *33.33% & 25% *33.33% & 25% *33.33% & 25% *33.33% & 25% *33.33% & 25% *33.33% & 25% *33.33% & 25%
5%
10%
10%
10%
Peoples Repub- 5% lic & 0% of China Spain 10%
10%
*33.33% & 25% Sweden 22.5% 10% 12.5% 10% 10% *33.33% & 10% & 25% Switzerland 15% 10% 10% 10% 10% *33.33% & 10% & 25% United Kingdom 15% 22.5% 12.5% 10% 12.50% *33.33% & 22.5% & 25% Other Countries *33.33% *33.33% *33.33% *33.33% *33.33% *33.33% & 25% & 25% & 25% & 25% & 25% & 25% * Rates 33.33% & 25% relates to payments to companies and individuals respectively ^ 10% if received by bank & 12.5% in all other cases
DO YOU THINK THERE WOULD BE BETTER COMPLIANCE IF YOU KNEW HOW YOUR TAXES WERE SPENT? DO YOU BELIEVE THERE WOULD BE BETTER VOLUNTARY COMPLIANCE IF THE TAXPAYING SOCIETY WERE GIVEN ENOUGH INFORMATION ABOUT TAX ENFORCEMENT MEASURES AND OTHER NEW TAX LAWS?
WE CAN HELP YOU FIND THE MISSING LINK TO SOLVING YOUR TAX PROBLEMS
“Do the right thing. It will gratify some people and astonish the rest.” Mark Twain. ENVIRONMENTAL LEVY BASE BROADENED:
The 0.5% Environmental Levy which was previously imposed only on the value of some imported goods, has now been expanded and will apply to all imported goods (including those from CARICOM which was previously exempt), in addition to total domestic supply of all goods ( excluding the services sector, charitable organizations, international organizations and mining).
SOME OF THE NEW TAX ENFORCEMENT MEASURES
THE INCOME TAX FREE TRESHOLD WAS INCREASED TO $557,232 .00 O N JANUARY 1, 2014 AND WILL BE FURTHER INCREASED TO $592,900 .00 ON JANUARY 1, 2016.
THERE ARE NEW EDUCATION TAX & INCOME TAX PENALTIES IN FORCE
CHARITABLE ENTITIES MUST DEDUCT & PAY OVER STATUTORY DEDUCTIONS
Tax Administration Jamaica wishes to advise the public that ALL entities, whether operating as a charity or otherwise, are required to deduct and pay over statutory amounts for income tax, education tax, NIS, NHT and HEART contributions for their employees monthly, under the PAYE system. All employers are also required to pay the employer’s contribution in relation to persons on their payroll. Employers are reminded that the monthly statutory payments are due by
The Income Tax and Education Tax Acts were amended to Increase Penalties effective October 1, 2014.
Penalties for Late Filing of $5000 per each month or part of a month up to a maximum of One Million Dollars ($1M) . Consequently, returns outstanding for 2013 and prior years as at October 1, 2014 will attract the penalty of $5,000 per month until the return is filed plus the tax due.. (For GCT the penalty is 15% of the tax due )
Interest of 20% also accrue plus a surcharge of treble the amount of tax due
The Tax penalty Harmonization Act (2014) also make provision for offences relating to incorrect declaration, chnge of address, keeping proper records, refusal to deliver tax information aids and abetd, etc. For which the taxpayer shall be liable on summary conviction in a RM court to a fine or improsionment
. Fines up to $2,000,000 for an offence against the Act -first attempt or 1 year imprisonment
Fines of $5,000,000 for second or subsequent offence
Trade or Business Licences (Effective April 1, 2015) BUSINESS/TRADER
CLASSIFICATION
FEES
For each designated place of business with Merchant, General Factor, liberty to store in and deliver out of public and $5,000 Wholesale Dealer other warehouses Auctioneer or Commission For each person carrying on business and shall $5,000 Agent include one designated place of business Wharfinger
For each wharf
$5,000
Super-cargo
For each person carrying on a business For each designated newspaper –
$5,000
Proprietor of
Current Tax Measures-2015 1.
SONAL INCOME TAX TRESHHOLD (pit) TO $592,900.00 EFFECTIVE JNUARY 1, 2016. 2.
HE NEW WITHOLDING TAX ON SERVICES OF 3% IS EFFECTIVE JUNE 1, 2015
(i) Daily
3.
$5,000 Newspaper
INCREASE OF ANNUAL PER-
NEW TRADE LICENCE RATES EFFECTIVE MAY 1, 2015
(ii) Other than daily $1,000
4.
GCT IIS NOW PAYABLE ON IMPORTED SERVICES PAYA-
Retailer Grade I Grade II Grade III
Grade IV
Grade V
Grade VI
Grade VII
Grade VIII
Grade IX Grade X
For each designated place of business Retailers whose annual turnover does not exceed $500,000.00. Retailers whose annual turnover exceeds $500,000.00 but does not exceed $1,000,000.00. Retailers whose annual turnover exceeds $1,000,000.00 but does not exceed $2,500,000.00. Retailers whose annual turnover exceeds $2,500,000.00 but does not exceed $5,000,000.00. Retailers whose annual turnover exceeds $5,000,000.00 but does not exceed $10,000,000.00. Retailers whose annual turnover exceeds $10,000,000.00 but does not exceed $15,000,000.00. Retailers whose annual turnover exceeds $15,000,000.00 but does not exceed $25,000,000.00. Retailers whose annual turnover exceeds $25,000,000.00 but does not exceed $50,000,000.00. Retailers whose annual turnover exceeds $50,000,000.00 but does not exceed $100,000,000.00. Retailers whose annual turnover exceeds $100,000,000.00.
BLE BY THE IMPORTER OF THE SERVICE SUBJECT TO
$2,500
70% FINES (PENALTIES & INTEREST)
$5,000
5.
GCT IS NOW PAYABLE ON GOVERNMENT
$10,000
6.
A SPECIFIC SCT OF $2.00 PER LITRE ON PETROLEUM PRODUCTS. –18 H MARCH
$15,000
2015 7.
$25,000
SPECIAL CONSUMPTION TAX ON PETROL HAS BEEN INCREASED BY $7.00 PER LITRE EFFECTIVE MARCH 13, 2015
$35,000
8.
LIFE INSURANCE COMPANIES WILL NOW PAY THE SAME RATE APPLICABLE TO FINANCIAL INSTITUTIONS-IE. 0.25% ASSETS TAX AND 25% CORPORTE INCOME TAX (CIT)
$45,000
$55,000
$65,000 $75,000
Tax losses will continue to be carried forward indefinitely; However, they will be allowed to offset no more than 50% of the net income (before taking into account the losses) in any year Losses from an approved farming activity may be used to offset income from others sources. This too
9.
SPECIAL CONSUMPTION TAX ON CIGARET IS NOW $12.00 PER STICK– MARCH 13, 2015
10. GCT ON RESIDENTAL
KINGSTON: 35 Westminster Road Kgn 10. Tel: 906-0707,622-1617 Email: info@abtaxlimited.com; Web: www.abtax limited.com : MOBAY:-Shop 31 Overton Plaza, 46 Union Street Mo-Bay: 971-3236; 971-8462