Some Jamaican business owners (companies, sole proprietors and partnerships) fail to consider whether they need to obtain licenses to operate their businesses in accordance with the provisions of the Licences on Trade and Business Act (the “Act”). Every person carrying on a trade or business specified in the first schedule of the Act is required to apply for and obtain a trade licence according to the classification of that trade or business.
Some of the classifications include, merchants, wholesale dealers, and retailers, among others and it is very important for business owners to ensure that they apply under the right classification for their business(es) when applying to obtain the trade license(s). For example, a ‘retailer’ would include any person occupying a store, shop, room or fixed stand, who buys from a merchant, importer or otherwise or who himself imports and sells in small quantities by retail to those who resell, use, or consume the goods.
Therefore, if this definition fits one’s business, the retailer classification would be the appropriate one. Further, retailers are classifiable from grade one to grade seven depending on the annual turnover rate of the businesses.
Though some business owners get the correct advice and ‘get a license’ for their business shortly after starting up their first business operations, some business owners forget to obtain other licenses, in accordance with section 12 of the Act, as their business activities and offerings continue to expand.
Section 12 of the Act states that:
Where different places of business, stores, shops or other premises are kept in the name of one person, or firm, a separate license shall be taken out for each place of business, store, shop or other premises:
Provided that the opening of another store, or place of reception of goods, and at which no sales are effected, shall not be deemed to come within the meaning of this section.
Where one business has different offerings under different business names, the owners of that business may be required to obtain more than one trade license for each business offering. The Collector of Taxes is also of the view that even if the different businesses are of the same classification and are in the same location, section 12 of the Act permits the Collector of Taxes to compel the owner of the businesses to pay for each offering within the same location as separate businesses.
Section 12 of the Act makes it clear that where a business owner has different places of business, stores, shops or other premises, it ought to take out a separate license for each place of business. Therefore, separate licenses would not be required where each offering in the name of the other ‘businesses’ cannot be classified as a separate ‘place of business’.
Accordingly, if a company called NewCo carries on two different businesses in its name at Location A, NewCo may be viewed by the Collector of Taxes as trading in the name of businesses which are not seen as being the same, and on that basis, the Collector of Taxes may treat both businesses as separate places of business, forcing Newco to obtain a separate trade licence for that additional business. Further, NewCo having opened a new place of business will have to pay the duty, or proportion of duty, which would have been payable to the Collector of Taxes from the business commencement date up until the current quarter of the year when NewCo is being assessed for the outstanding payments.
NewCo, like every other business owners commencing business, or opening a new place of business, store, shop or other premises, would have been obligated to file a particular return with the Collector of Taxes within fourteen days after the business commencement date, pay the proportion rightly payable for the licence under the Act, and obtain the appropriate licence.
All penalties under the Act are recoverable summarily in the parish in which the business owner, being the offender, resides or where the offence was committed and will be enforceable in default of payment of such penalty by imprisonment with or without hard labour for a period not exceeding thirty days. Further, the license duty due and payable, together with any surcharge thereon may be enforced under the provisions of the Tax Collection Act.
It is therefore important that business owners consider whether the Act applies to their business offerings, and if so, whether they have the appropriate licenses required by the Act to carry on their trade or business. When in doubt, it is always recommended to obtain legal advice so that business owners can be certain of the things needed to be done to ensure that they their business are being operated in full compliance with the law.
Jezeel Martin is an Associate at Myers, Fletcher and Gordon, and is a member of the firm’s Commercial Department. He may be contacted at firstname.lastname@example.org or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.