On April 1st 2014 the Provisional Collection of Tax (Minimum Business Tax) Order, 2014, took effect. In this article I will attempt to explain this new tax and its impact.
What is the minimum business tax? The minimum business tax is the sum of $60,000 which is payable in respect of each year of assessment being the period of twelve months commencing on the 1st January in each year. The tax is payable in 2 equal instalments of $30,000 each: the first instalment is payable on or before June 15 of the year of assessment and the second on or before September 15 of the year of assessment. The first year of assessment is the year 2014 and the first instalment of the minimum business tax is therefore due on or before June 15, 2014.
Who is liable to pay the minimum business tax? The minimum business tax is payable by every “specified taxpayer” in respect of each year of assessment.
According to the Order a specified taxpayer is: 1. a company or other body corporate incorporated or registered in Jamaica under : (a) The Companies Act (this includes overseas companies registered under the Companies Act); (b) The Building Societies Act; (c) The Friendly Societies Act; and (d) The Industrial and Provident Societies Act but not one that has been registered as a charitable organization under the Charities Act, 2013; and 2. An individual who operates a trade, profession, vocation, or business that has gross revenue of not less than $3 million in the year of assessment. (Gross revenue in the case of an individual means his/her statutory income after deducting an amount equal to the income tax threshold amount and income from emoluments.)
The minimum business tax as a credit on income tax liability The minimum business tax paid by a specified taxpayer is to be credited towards the income tax payable by the specified taxpayer for the year of assessment only and cannot be used to offset tax liability in any other year. The tax is therefore to be treated as a discharge by the specified taxpayer of its liability to income tax for the year of assessment to the extent of the amount of the tax paid. The remainder of the specified taxpayer’s liability to income tax remains and is not otherwise affected by this payment or discharge.