Tax Me If You Can
Simple fact: It is as certain as a Jamaican winning an Olympic 100-metre race, that you will be liable to pay some sort of tax as an adult. Many enjoy the feeling of elation that comes with the Jamaican flag flying high on a medal podium, but virtually no one shares that feeling when they are told it is time to pay a tax.
Whether as an individual or a company, an employed or self-employed person, a resident or a non-resident, there are various taxes which apply to everyday life in Jamaica. This includes income tax, general consumption tax, transfer tax, education tax and stamp duty. These taxes, once collected, are a primary source of the revenue the Government uses to run the country, maintain and improve our infrastructure and operate the basic systems we rely on, such as public health and education.
In Jamaica, residents are taxed on all their income no matter where in the world this income is generated. Income tax is also charged on all income earned in Jamaica, regardless of whether the person is a resident, e.g. domiciled in Jamaica.
The income tax rate for individuals is 25% where the income is between J$1.5M and $6M (inclusive) and 30% where the income exceeds J$6M. No income tax is charged where one’s income is below J$1.5M. The corporate income tax rate varies - 33.33% for most regulated companies, 30% for building societies and 25% for unregulated companies.
Other taxes and contributions tied to your individual income include Education Tax, NHT contributions, NIS contributions and HEART contributions. NIS contributions are at a rate of 6%. This is paid equally by the employer and the employee. The NHT contribution is a total of 5% of all taxable emoluments received from employment in Jamaica - 3% to be paid by the employer and 2% to be paid by the employee. Education Tax is charged at a total of 5.75%, 3.5% is paid by the employer and 2.25% paid by the employee. This percentage is calculated on your income after NIS contributions and contributions to an approved superannuation scheme have been deducted. HEART contributions are paid solely by employers at a rate of 3%.
Being self-employed does not exempt you from paying taxes, but you are solely accountable for paying these taxes over to Tax Administration Jamaica. In some instances the rates for self-employed persons differ from those charged in an employer/employee relationship.
Tax is also charged on dividend income paid out by a Jamaican company. This tax is to be withheld by the issuing company upon payment of the dividend. The income of a registered charitable organisation, an approved superannuation fund and other streams of income are exempt from income tax.
General Consumption Tax (GCT)
GCT is payable on the supply of goods and services in Jamaica and the importation into Jamaica of goods and services. The current GCT rate is 15%. Some goods and services may be GCT exempt or assessed at a rate of 0%. GCT is also payable on imported services, i.e. a supply of services to a person who is resident in Jamaica by a person who – (a) is not resident in Jamaica; or (b) is resident in Jamaica, where the services are supplied by a business carried on by that resident outside Jamaica, to the extent that the services are utilized in Jamaica and to the extent that the supply of the services would be a taxable supply (i.e. subject to GCT) if they were performed in Jamaica by a registered taxpayer.
Transfer tax is applicable to the transfer of land and securities. Transfer includes any legal or equitable transfer by way of sale, gift, exchange, grant, assignment, surrender, release or other disposal and includes a transfer by or at the order or direction of a court of competent jurisdiction or by way of compulsory acquisition. Transfer tax is assessed at the rate of 2% of the market value of the property being transferred. Certain transfers are exempt from transfer tax such as transfers of listed securities across the floor of the Jamaica Stock Exchange and transfers by way of gift to a registered charitable organisation.
Any document evidencing an agreement between parties (e.g. licence agreements, share purchase/sale agreements, agreements for sale of land), if executed in or enters/received in Jamaica, will incur Stamp Duty. The applicable rate of stamp duty depends on the type of document and in any event is now nominal.
Income tax and the associated contributions are deducted by the employer, at the time of paying salary, who is then required to file returns on March 15 in the year following the year of assessment and pay over the deductions monthly. GCT is payable at the time of supply and the supplier is required to file returns and make payments on the last working day of the month, after the end of the taxable period. Transfer tax and stamp duty are to be assessed within 30 days of the applicable transaction date and payable within the period identified in the notice of assessment. Late filings and payments will result in the accrual of penalties and interest and in some cases an offence liable to fine or imprisonment.
Much like the 100-metre race, delay in paying your taxes, and failure to file the mandatory returns or documents, will cause you to be more than last place.
Shaniel May Brown is an Associate at Myers, Fletcher & Gordon and is a member of the firm's Commercial Department. Shaniel may be contacted via email@example.com or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.