The Government is to forgo $14.032 billion in taxes as part of measures to stimulate greater business and economic activity and boost growth.
This is contained in the Revenue Measures for the 2019/20 fiscal year announced by Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, as he opened the 2019/20 budget debate in the House of Representatives on March 7.
The measures, which take effect on April 1, include abolishing the Minimum Business Tax, payable by all registered companies. The potential revenue loss is $1.093 billion.
In addition, there will be an increase in the annual General Consumption Tax (GCT) threshold to $10 million, up from the current $3 million. The potential revenue loss is $0.731 billion.
“This means that approximately 3, 500 small businesses that currently file GCT will no longer be required to do so. Tax Administration Jamaica (TAJ)), which currently has to see to the compliance of these 3, 500 [businesses], will now free up resources, allowing them to concentrate on larger businesses and ensure they are complying. This is economic opportunity for all,” Dr. Clarke said.
Also, the House is being asked to consider a proposal to supplant all Ad Valorem Stamp Duty rates payable on any instrument pursuant to the Stamp Duty Act, including the granting of security as collateral for loans, with a specific (flat rate) stamp duty of $5000 per document. The potential revenue loss from this measure is $6.650 billion.
Dr. Clarke pointed out that “these Ad Valorem stamp duties are distortionary…and disincentives the very activities we want to encourage. It discourages transactions, competition, and impedes access to finance for all but particularly, micro and small businesses.”
Other measures include a reduction of the transfer tax payable on the transfer of real property and financial instruments. It is proposed to reduce the transfer tax to two per cent, down from five per cent. The potential revenue loss is $3.431 billion.
There will also be an increase in the transfer tax (estate tax) threshold applicable to the estate of deceased persons. It is proposed to increase the transfer tax threshold in the case where the estate of a deceased person is to be transferred. This threshold is to be increased to $10 million, up from the current $100,000. The potential revenue loss is $0.287 billion.
“This will allow for greater mobility of assets, which is consistent with our drive for economic growth,” Dr. Clarke said.
Other measures include a proposal to abolish the asset tax payable by non-financial institutions. The structure of the asset tax was modified in 2012 to impose, on the one hand, a tax regime for non-financial institutions and on the other hand, a tax for financial institutions.
The potential revenue loss is $1.840 billion and the effective date for implementation is the year of assessment 2019.