By Kmar Henry

While the Tax Administration continues to learn and adapt to its fairly new RAISE system which was implemented in 2015, it has allowed the government to see a spike in tax collections, as individuals operating under the rugs are now being tracked by compliance officers to make tax payments.

Furthermore, this has added much value within the field of legalisation as,in this year 2020 alone, more than 2,000 businesses have been registered as reported by the Companies Office of Jamaica. 

It is now mandatory to have a Tax Compliance Certificate (TCC), just to open a business account in Jamaica. So, does this increase in legal businesses mean that our business owners and Jamaicans in general are now understanding the value of being tax compliant? Or is it that the government has now found a way to somehow force business owners to comply? Why have we accepted this tax fear?

Coming from an agrarian culture that dates back to the 18th Century, where the simple life prevailed, it just wasn’t important for many Jamaicans to know much about taxes until it was implemented by Norman Manley in the 90s. Farming, selling produce and livestock was the financial order of the day until income tax, NHT, NIS, Edtax, Business registration, trade licence, asset tax, business tax, etc became necessary to do business.

But it is difficult to escape the fact that the more revenue one generates, the more taxes have to be paid and this has led to many business owners calculating how to hide money from tax legislation. Taxes in Jamaica for businesses are heavy with very little recourse for relief. However, foreigners do benefit from a three-year tax relief stipulation that allows their enterprises to thrive. Many local business leaders and operators have objected to this but little has been done, although there has been in recent years a reduction in asset and business tax, and also more recently a fall in customs duty and GCT respectively.

But is this enough to shift the minds and practices of business owners who instinctively seek to hide their gains from the taxman? This is a matter that has been a major issue for the tax administration of Jamaica for years.

What business owners must know about taxes

There are allowances given by the Government which can decrease tax payments for businesses. However, like everything else in life, it will require getting the right information and doing research. If you ask top investors, business owners or CEOs worldwide, they will tell you that investing in property or land is one of the best methods for gaining a return on investment.

An excellent example of this was illustrated by the owner of fast food restaurant, McDonald’s. Capital allowances given for assets within this category will last a lifetime. Thus, all investments from profits made should be plunged into assets of this sort. However, other assets such as equipment and motor vehicles play their part too in lowering tax payments. Hence, investing here can be of great help as percentages given will have or prove to be a major impact on taxes.

It is no wonder real estate owners don’t have to play hide and seek with the government and the same applies to owners of large equipment companies. Investing in these assets is the best way to stay ahead, to gain tax credits and other benefits.

Also, it does pay off to have a working knowledge of how GCT applies and what concerns there are for business owners.  Speak to your accountant on obtaining GCT credits and how you can use them properly to make tax payments. 

It is also important to note that all accounting and financial records should always be kept up to date while running your business as these will prove pivotal in the case of audits from government authorities. The fact that you may be a small or micro enterprise should never be an excuse for business owners to plead ignorance of their tax obligations . Too many Jamaican businesses fear taxes rather than try to learn about them and understand them. Many are unaware that there are credits and gains that can be made only if they inform themselves.