All entrepreneurs should know their tax responsibilities, rights and obligations. Your TAX KIT is intended to provide you with the basic tax information for starting and operating your business, and to explain the operations of the Tax Administration.
YOUR TAX KIT CONTAINS…
TRN Registration Form (individuals)
TRN Registration Form (organizations)
Tax Advisory Visit – (not available)
Notes and Instructions for Completion of Income Tax Returns IT01 - IT05
Income Tax Return Forms IT01 – IT07
Education Tax Forms ET01 – ET03
Pay No GCT (exempt goods) – (not available)
GCT Return Forms – 4A, 4B, 4C, 4D, 4
101 Most Frequently Asked Questions
Pay Your Taxes Online – (not available)
National Insurance Scheme (NIS) – (not available)
Inside Customs
The Tax Administration Directorate
FIRST STEPS:
Individuals: Register your business name at the Companies Office of Jamaica.
Companies: Register your company at the Companies Office of Jamaica.
Partnerships and other Organisations: Register your partnership or Organisation at the Companies Office of Jamaica.
You will be given a Certificate of Registration of Business Name (for Individuals), or a Certificate of Incorporation for Companies.
2. APPLY FOR A TRN:
Individuals: Your personal TRN will be upgraded to that of a sole proprietor and a branch number (or - 001) will be added to it, to signify that you are “Trading as…”
Companies, Partnerships and other Organisations: You will be given a separate TRN, with branch numbers for each existing branch.
This can be done at any Collectorate or at the
Taxpayer Registration Centre.
12 Ocean Boulevard
Kingston Mall
Kingston.
3. REGISTER FOR GCT:
Individuals: Your TRN, along with the branch number will be used as your GCT registration number.
Companies and other Organisations:
The TRN will become the GCT Registration number
This can be done at any Collectorate. Please see the GCT Guide inside this kit to determine whether you are required to register for GCT.
4. REGISTER WITH THE NHT, NIS AND HEART:
As a Self-employed person to make voluntary contributions, if you are self-employed, and also as an Employer if you will be employing persons; or
As an Employer if you are a Company or other organization.
5. APPLY FOR APPROVED/EXEMPT STATUS:
This applies to Organisations seeking Approved Charitable/Educational status
Apply in writing to the Taxpayer Audit & Assessment Department (TAAD) - ESOP, Superannuation & Exempt Organisations Unit, 116 East St., Kingston
Since 1994, the law requires that all individuals, business enterprises and other types of organizations be assigned a Taxpayer Registration Number (TRN). The TRN allows taxpayers to conduct business transactions with Tax Administration and other government entities. These business transactions include:
Filing tax returns
Paying taxes: GCT, Income Tax, Ed. Tax, Contractors Levy
Obtaining a Tax Compliance Certificate (TCC)
Obtaining a Driver’s Licence
Obtaining a Road Licence
Applying for a Motor Vehicle Title
The form of business you operate determines what taxes you must pay and how you pay them. The general kinds of business taxes are as follows:
Income Tax is a tax levied on a person’s statutory income. Statutory income is all income from all sources after allowing for allowable deductions under the Income Tax Act for example NIS, Pension Exemption and Approved Superannuation. The income tax threshold for individuals, which represents your tax-free income, is currently $193,440 with effect from January 1, 2006. The rates for income tax are 25% for individuals and 33 1/3 % for companies.
All businesses must file an annual income tax return. These businesses include companies, partnerships, self-employed individuals and other bodies. These returns must be filed no later than March 15. This means that these entities must file a final income tax return for the previous year and an estimated Income Tax Return for the current year by March 15. The estimated income tax should be paid quarterly to the Collectorates by:
March 15
June 15
September 15
December 15
Failure to file an Annual Return may lead to the Taxpayer Audit and Assessment Department (TAAD) making an estimated assessment and the Inland Revenue Department (IRD) may also issue a court summons for the return.
Jamaica’s income tax system is based on a Pay As You Earn (PAYE) System. You must pay the tax as you earn or receive income during the year. An employee usually has income tax deducted by an employer from his or her pay. Income tax deducted through the PAYE System is payable to the Government, via the Collectorates, 14 days after the end of each month. Employer’s Annual Return (1T06) for each year is due by January 14, the following year.
GENERAL CONSUMPTION TAX (GCT)
Any person whose total annual supplies of goods or services are $1M or more, and who is engaged in a taxable activity must apply to register as a Registered Taxpayer. As a Registered Taxpayer the GCT Act requires you to:
Charge and collect GCT at the specified rate appropriate to the goods and services that you supply.
Standard rate 16.5%
Zero-rate 0%
Tourism rate 8.25% (50% of standard rate)
Telephone call charges 20%
Motor Vehicle varies according to cc rating
Calculate for each taxable period net tax due/creditable and file GCT returns monthly. N.B. Returns must be filed even when the tax payable is nil.
Remit the net GCT collected to the Collectorates within 30 days.
A Registered Taxpayer will be able to claim a credit for GCT paid on business purchases (input tax), whenever a taxable supply is made.
There are sanctions applicable for late filing and payment of GCT.
EDUCATION TAX
Contributors are employed persons, self-employed persons, and employers. Age requirements for employed persons are 18 years to retirement age, which is stated as 65. There is no age limit stated for the self-employed. Employees pay 2 percent (2%) of gross pay less NIS and any other approved pension contributions; and employers pay 3 percent of gross pay less NIS and any other approved pension contributions. No contributions are required from those earning the minimum wage. Self-employed persons pay 2 percent of their statutory income.
ASSET TAX
WHAT IS ASSET TAX?
This is a Tax on Assets of Companies and other specified institutions.
WHAT ARE ASSETS?
Assets are property available to meet debts. For the purpose of the Act, these include: -
Estate or interest in land
Equipment furniture, machinery, plant and other movables
Outstanding balances on bans and advances made by a company
Cash in hand and in bank
Outstanding balances due to company by sundry debtors
WHEN IS THE DUE DATE FOR FILING AND PAYMENT?
An annual declaration of the value of their assets and payment of prescribed fee must be made on or before September 1
The prescribed Declaration of Assets Form is called Form AT01
A profit and loss account and balance sheet should be filed with the return; however, once the company has submitted a Profit and Loss Account and a balance sheet with its income tax return, it is not necessary for the company to do so again.
CONTRACTOR’S LEVY
This is a tax on construction, tillage and haulage operations. A levy of 2% is charged on the gross amount payable to any contractor or sub-contractor under a contract for service. The levy must be deducted at source and paid over to the Collectorate within 14 days after the end of the month in which the levy was deducted. The person making the deduction must furnish the contractor with a certificate showing the gross amount of the payment and the tax deducted. The person who fails to deduct the levy is still liable to pay it over to the Collectorates.
WHAT IS TAX COMPLIANCE?
Tax Compliance is the degree to which a taxpayer complies (or fails to comply) with Jamaica’s tax laws. A major part of the Tax Administration’s mission is to foster voluntary compliance (that is raising appropriate tax filing and payment through taxpayer co-operation) using all possible methods such as taxpayer education, taxpayer assistance and penalties.
Taxpayer Education plays an important role in creating tax awareness. TASD and IRD conduct public education programmes which focus on:
School children who are the next generation of taxpayers
Associations such as Small Business of Jamaica, Jamaica Employers Federation, Returning Residents Association etc.
Community groups.
Participating in Conferences, Information Fair, Expos and set up booths in order to meet people (taxpayers) and provide tax information and answer questions.
Educating the general public by issuing tax guides, brochures, pamphlets, tax bulletins and other tax materials.
The Tax Administration Directorate provides assistance to its taxpayers in the following forms:
Walk-in assistance - taxpayers may walk into any of the 28 Collectorates Island wide for tax assistance, which includes assistance given in completing tax forms and other tax related documents. Tax advice is also given and taxpayer queries are responded to daily.
Telephone assistance - taxpayers may telephone any of the 28 Collectorates Island wide for tax assistance. Taxpayers can also fax their queries
TAX-HELP Line – Taxpayers may call the Tax Help line
toll-free at 1-888-TAX-HELP (1-888-829-4357)
Tax Advisory Visits– Taxpayers may request that a tax officer visits their business to provide a one-on-one tax consultancy
Special Taxpayer Service Programme - this programme is conducted annually during the period January to March to assist taxpayers in filing their income tax final returns by March 15.
PENALTIES
The Jamaican Tax system is based on a self-assessment, which means you are required to assess your tax liability using tax return form in which you declare your income and expenses. That is the onus is on you (taxpayer) to calculate, report and pay your tax liability. As a result, if taxpayers are non-compliant then there are various sanctions applicable to punish, penalize and deter taxpayers from being non-compliant.
These sanctions include:
Penalties for failure to file tax returns
Penalties for failure to pay taxes
Estimated Assessments being raised
Court summons being issued
Seizure of goods
Taxpayers who are compliant may apply for a Tax Compliance Certificate (TCC).
WHAT IS A TCC?
In order to encourage voluntary compliance the department has implemented, as of October 2003 its One-Stop TCC, which allows compliant taxpayers to apply for their TCC renewal via fax or email without going to the various Statutory Agencies for Tax Clearances. Since September 2005 the Online TCC was implemented. This represents an advancement to the One-Stop TCC system as taxpayers are able apply for their TCC renewal via the Internet.
Every business must keep records. Business operators are required by law to maintain proper records in English, to substantiate their income and expenses. Without proper record keeping, you will not be able to declare your income or expenditure accurately or allow tax auditors to conduct an accurate audit. Proper record keeping will help you to:
Monitor the progress of your business
Prepare your financial statements
Identify sources of receipts
Keep track of deductible expenses
Prepare your tax returns
Support items reported on your tax returns
HOW LONG MUST RECORDS BE KEPT?
You must keep your records as long as the various tax laws require. Some records are to be maintained for a minimum of six 6) years. This means you must keep records that support an item of income, or deduction on a return until the period of limitation for that return runs out.
The Tax Administration Directorate is committed to assist taxpayers to understand their rights and obligations. Taxpayers’ awareness of these rights is essential to maintaining the efficiency and fairness of the Tax Administration System.
Under the law, only the tax due is payable
2. Courteous Service
You are entitled to, and should expect prompt, efficient and courteous treatment in your dealings with us.
3. Privacy and Confidentiality
You are entitled and should expect that the information you provide us will be used only for purposes that the law allows; that it will not be disclosed to anyone, except as authorized by law.
4. Access to Information
You are entitled access to your own tax information held by us as permitted by law.
5. Complaints
If you are not satisfied with our service, you have the right to complain and give comments to us.
6. Tax Assistance
You have the right to request tax assistance.
YOUR OBLIGATIONS AS A TAXPAYER
You should be honest in your dealings with us.
You should file correct returns and document and provide complete and accurate information within time limits specified
You should pay taxes due on time
You should keep sufficient records to enable your tax liability to be ascertained accurately.
You should keep us informed if you have changed your business or mailing address.
In 1999, Jamaica’s Tax Administration system underwent a major restructuring exercise under the Tax Administration Reform Project (TaxARP). This was followed by the Customs Modernization Project. These major tax reforms have resulted in the establishment of new and restructured offices and tax departments, namely:
Director General’s Executive Office (DGEO)
Oversees and guides the operations of the Jamaica Tax Administration through an executive Office staffed with specialists in various areas.
The Inland Revenue Department (IRD)
The Inland Revenue Department has full responsibility for all compliance, tax collections and taxpayer service functions except SDTT and Customs Duties. There are 28 Collectorates islandwide.
The New Tax e-Payment Portal, which started December 9, 2004, represents the 29th Collectorate and is called the Virtual Collectorate This Collectorate may be accessed via the Internet by logging on to the Tax Administration’s website at:
http://www.jamaicatax-online.gov.jm/.
The Virtual Collectorate allows you to pay certain taxes and fees online such as property tax, traffic ticket fines and GCT demand notices online using a major credit card. Tax-related information such as motor vehicle procedures or fees, TRN, TCC and Tax Forms may be viewed and downloaded. It is also possible to apply for a Tax Compliance Certificate (TCC) online.
Taxpayer Audit and Assessment Department (TAAD)
TAAD brings together the audit and assessment functions of the former Income Tax, General Consumption Tax, Stamp Duty and Transfer Tax and the Revenue Board.
Tax Administration Services Department (TASD)
TASD provides the following centralized services for the Tax Departments:
Legal Services
Taxpayer Education
Public Relations
Training
Property Services and Procurement
Taxpayer Registration
Forms, Manuals and Procedures
Taxpayer Appeals Department (TAD)
TAD is responsible for processing appeals to decisions made by Tax Commissioners. They also have responsibility to process waiver applications.
Customs Department (CD)
The Customs Department has responsibility to collect customs duties, facilitate trade and protect the borders of the country.
Business Taxes
Tax Compliance
Record Keeping
Rights and Obligations
The need for potential and practicing entrepreneurs to know their tax responsibilities, rights and obligations cannot be overemphasized. In a self-assessment system, the onus is on you calculate, report and pay your tax liability. You are therefore being encouraged to: