A Bill making provisions for harmonising the treatment of charitable organisations for the purpose of taxation was passed in the House of Representatives on May 15.
The Charitable Organisation (Tax Harmonisation) (Miscellaneous Provisions) Act 2013, was piloted by Minister of Finance and Planning, Dr. the Hon. Peter Phillips.
The Bill is considered as a structural benchmark within the extended fund facility programme between Jamaica and the International Monetary Fund (IMF).
In his comments, Dr. Phillips explained that the legislation seeks to provide standard definitions for the terms “approved charitable organisation” and “charitable purposes” for use across tax types under various enactments.
“The proposed amendments in this Act will (also) eliminate the need for the exercise of Ministerial power to grant waivers of certain taxes to entities considered to be dedicated to charitable purposes. Once the organisation is approved as a charity in keeping with the harmonised regime, consistent treatment across the tax types will be provided for in the statutes,” the Finance Minister said.
He said there were concerns that the current regime allows for the possibility of significant revenue loss by way of tax expenditures.
“The matter was considered so urgent by both the Government of Jamaica and the IMF and other multilaterals, including the Inter-American Development Bank (IDB), that there should be a demonstration of a commitment to immediately curtail the exercise of discretion at the ministerial level and to put this on a transparent basis,” Dr. Phillips said.
The Bill harmonises the tax treatment of charitable organisations by amending the following enactments, namely: the Customs Act, the General Consumption Act, the Income Tax Act, the Property Tax Act, the Stamp Duty Act, and the Transfer Tax Act.
Meanwhile, Dr. Phillips said that the provisions in the Act will be incorporated into the proposed Charities Act, which will be brought to both Houses of Parliament in September.
The Charities Act is now with the Office of the Chief Parliamentary Counsel for drafting. This proposed Bill seeks tofacilitate the proper supervision of entities carrying out charitable activities.
For the 2010/2011 financial year, the Government granted waivers to charitable organisations amounting to $4 billion, while the sum for 2011/2012 was $2 billion.
Contact: Latonya Linton