The proposed tax changes announced by the Minister of Finance on March 7, 2019, will no doubt touch all corners of Jamaica. While most of the changes won’t affect the tax return you’ll file this March 15, they will start to affect your cashflow early in 2019.
As with many of our tax changes over the years, the implementation timeline is very short – and for once we won’t complain about that. However, some of these proposed announcements may require some clarification.
General Consumption Tax
The government has proposed to increase the threshold to $10 million, up from the current $3 million, effective April 1, 2019. A long overdue move if you ask many small business owners, as the last increase in the threshold was over a decade ago. The main question here for many entrepreneurs who are already Registered Taxpayers is; “Do I stop charging GCT and filing GCT returns as of April 1, 2019?” This question remains to be answered. Until such time, let’s look at how the transition was made in 2009. Registered taxpayers who did not meet the new threshold were required to apply for a change of status. At the end of the application process, the Commissioner granted a notice of change of status and the effective date of the change. Registered taxpayers were required to pay GCT on the value of goods held immediately before the change of status.
Another burning questions, I am sure, are from persons currently under GCT audit or who have been issued GCT assessments. Again in 2009, the change in status did not affect the GCT liability via assessments, audits or actual filings made prior to the date of the change. It was also pointed out, that previously Registered Taxpayers were not precluded from future tax audits for the period during which they were a Registered Taxpayer.
We await final word as to how the transition process will be administered this time around. I recommend you continue to charge and file as usual, until this proposed change is passed into law and/or guidance is provided on the transition process.
Abolition of Assets Tax
Seen as a “hold up” tax for many company owners, the abolition of Asset Tax payable by non-financial institutions is a joyous move. The announced effective date is the year of assessment 2019. As a current year tax, Assets Tax for the year of assessment 2019 is due March 15, 2019 and is based on the financial statements of the year of assessment prior to the due date. Based on the wording of the Ministry Paper, non-financial companies would not be required to pay Assets Tax come March 15,2019. However, it’s important to note, that these are only proposed changes, which means they are not yet signed into law and are open to amendments. So, I encourage you to stay informed.
Abolition of Minimum Business Tax
Like Asset Tax, Minimum Business Tax will be abolished effective the year of assessment 2019. MBT is also a current year tax that was normally due in two equal instalment June 15 and September 15. Based on the wording of the Ministry Paper, it would appear also that taxpayers would not be required to pay this tax in 2019. Again, it’s important to note that these are only proposed changes, which means they are not yet signed into law and are open to amendments. So, once again, I encourage you to stay informed.
Changes to Stamp Duty & Transfer Tax
It was proposed that all ad valorem stamp duty rates be abolished and replaced with a specific flat rate stamp duty of J$5,000 per document, while Transfer Tax on the transfer of real property and financial instruments be cut from 5% to 2%. Both changes have a proposed implementation date of April 1, 2019.
The government expects this change to stimulate economic activity, encourage activity in the credit market, property development and real estate. I will continue to follow these developments and keep you informed as the need arises. Subscribe to our blog to get updates as soon as they are posted.
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The proposed tax changes announced by the Minister of Finance on March 7, 2019, will no doubt touch all corners of Jamaica. While most of the changes won’t affect the tax return you’ll file this March 15, they will start to affect your cashflow early in 2019.
