Reform of Tax Policy to Enhance Business Facilitation

KINGSTON — The proposed reformation of  the tax policy and its administration by the Government is expected to significantly enhance the convenience with which business is facilitated, thereby resulting in increased investments and other economic boosting activities by local and foreign interests.

Commissioner General, Viralee Bailey Latibeaudiere, of Tax Administration Jamaica (TAJ), which has responsibility for the administration of the country's domestic tax regime, explains that the administrative reform process aims to promote efficiency and equity in the administration of taxes; develop new business processes; and enhance customer service delivery, thereby improving voluntary compliance among taxpayers, increasing tax collections, and facilitating the ease with which business is done.

A Green Paper outlining the policy underpinning the tax reform programme was tabled by Finance  Minister, Hon. Audley Shaw, at the closing of the 2011/12 Budget Debate in the House of Representatives, in May.

Notable provisions include: enhancing economic growth and competitiveness; and instituting measures that must meet the revenue demands of the Budget, while maintaining macro-economic and social stability.

Recommendations in the Green Paper pertaining to the General Consumption Tax (GCT), Income Tax, compulsory filing of income tax returns, simplification of motor vehicle tax laws and the tax incentive regime, and minimum business tax and contractors’ levy, are being targeted for implementation on January 1, 2012.

A joint nine-man Parliamentary Committee has been established to review the Government’s tax reform proposals for implementation in January.

Making the announcement at the July 12 sitting of the House of Representatives, Leader of Government Business in the House and Education Minister, Hon. Andrew Holness , informed that  Mr. Shaw will chair the Committee, which includes:  Foreign Affairs and Foreign Trade Minister, Hon. Dr. Kenneth Baugh;Tourism Minister, Hon. Edmund Bartlett; and Opposition representatives -Member of Parliament for East Central St. Andrew, Dr. Peter Phillips; Member of Parliament for South St. Andrew, Dr. Omar Davies; Member of Parliament for South St. Catherine,  Fitz Jackson, and Member of Parliament for Western St. Andrew,  Anthony Hylton.

Reform of the tax regime’s administrative structure is based on recommendations by the International Monetary Fund (IMF), which was invited to conduct a review of the system, which it undertook between 2006 and 2010.

On the administrative reforms, Mrs. Latibeaudiere tells JIS News that this is a paradigm shift, tailored towards expanding the “one stop shop” concept of doing business. This, she points out, is characterised by the amalgamation of specific services, and housing them in single locations.

Mrs. Latibeaudiere informs that the TAJ is a consolidation of the former Inland Revenue Department (IRD); the Taxpayer Audit and Assessment Department (TAAD); and the Tax Administration Services Department (TASD), and came into effect on May 1, this year.

She explains that this new model of a unified domestic tax department, sees the post of Director General, under the previous system, being replaced by the newly created position of Commissioner General, supported by three Deputy Commissioners General.

Other recommendations from the IMF include: a separation of domestic taxes from international taxes, the latter including the Common External Tariff (CET), which will be administered by the Customs Department; and the eventual implementation of a Semi Autonomous  Revenue Authority (SARA) model to manage the responsibility for domestic taxes. These, the Commissioner General points out, formed part of the IMF’s Standby Agreement (SBA) negotiated with the government last year.

Mrs. Latibeaudiere says the administrative reform process commenced in January 2009, 10 years after the last such exercise was undertaken, adding that over the ensuing 12 months, several units were established. These included: a Customer Care Centre (CCC); a Large Taxpayer Office (LTO); a Forensic Data-mining Intelligence Unit (FDIU); and a Special Enforcement Team (SET). This was followed by the establishment of the TAJ on May 1, with Head Office operations carried out from new offices at the Petroleum Corporation of Jamaica (PCJ) Building, 36 Trafalgar Road, Kingston 10.

Under the current system, the three Deputy Commissioners General have been assigned portfolio responsibility for all activities executed under Operations, Management Services, and Legal Support.

Outlining each area, Mrs. Latibeaudiere explains that the Deputy Commissioner General for Operations, Rosalee Brown, oversees activities relating to audit and investigations, compliance, debt management and collections, and customer service.

Deputy Commissioner General for Management Services, Dr. Terence Frater, is in charge of all activities pertaining to administrative services, information technology, finance management, planning and review, and human resource management and development. Deputy Commissioner General for Legal Support, Grace Rookwood, has responsibility for matters pertaining to research and advice, litigation (civil and criminal), legislation and treaties.

Under the previous tax administration regime, the then Director General had direct administrative authority over five departments comprising IRD, TASD and TAAD, along with customs and tax appeals. She was supported by five Commissioners, who were invested with legal authority for each of the departments for which they had portfolio responsibility.

Additionally, she says the departments operated as silos, pointing out that clients often encountered challenges distinguishing the various services offered, and selecting the one relevant to their needs.

“So, this unified domestic tax structure was instituted to remove those silos. With the consolidation of these (IRD, TAAD and TASD) departments, the newly established Tax Administration Jamaica (TAJ) has seen a re-organisation of tax administration and separation of (the) headquarters’ functions from the operational activities,” she states.

The Commissioner General further points out that under the one stop shop concept, no longer will staff, such as Auditors and Compliance Officers, be housed in separate departments, resulting in clients having to move from one area to another to access the services required. All of these, she notes, will be available in each of the seven revenue service centres (RSC) islandwide from which the services will delivered.             

These include RSCs at Constant Spring, St. Andrew; King Street, downtown Kingston; Spanish Town, St. Catherine; May Pen, Clarendon; Mandeville, Manchester; St. Ann’s Bay, St. Ann; and Montego Bay, St. James.

Mrs. Latibeaudiere tells JIS News that  the one stop shop concept will not only focus on the physical relocation of services, but will address the extent of paper work and the requisite number of payments involved to facilitate business and fulfilling statutory obligations, while assuring that “the process has started."

“If the system becomes more equitable and is established as a certainty, it is going to affect business confidence in a positive way…because people will be more certain of how we operate,” she says.

Regarding the IMF’s recommendation that a Semi Autonomous Revenue Authority (SARA) model be adopted for the administration  of Jamaica’s domestic tax regime, Mrs. Latibeaudiere says this concept, which is used in other tax jurisdictions globally, has been described as the “best model” for such an undertaking. Unlike the existing tax structure, which she points out falls under the purview of central government, the SARA model is similar to that of an Executive Agency, with its own Board of Directors.

Noting that the IMF has set an April 1, 2012 timeline for the implementation of the SARA, Mrs. Latibeaudiere says the transitional processes “are already taking shape,” while assuring that “we are on track” to meet the April 2012 deadline.

Mrs. Latibeaudiere  tells JIS News that the IMF recommendations for reforming the administrative structure of Jamaica’s tax system  are being “rigorously followed” to ensure that the stipulated  benchmarks are met. In this regard, she informs that “we have, so far, met almost 100 per cent of the benchmarks, as outlined in the SBA."

 

By Douglas Mcintosh, JIS Reporter