Sum of Verified CUF to be Charged as Allowed Expenses

Beginning June 1, an amount not exceeding $1.5 million of verified Customs User Fee (CUF) payments per firm, will be charged as allowed expenses under the Income Tax Act, when companies are making annual returns. This is part of Government’s efforts to alleviate the negative effect of CUF on companies’ operations, Minister of Finance and Planning, Dr. Omar Davies said in his 2007/08 budget presentation in the House of Representatives, yesterday (April 12).
The CUF was introduced in the 2002/03 financial year as a compromise measure when elements of the private sector objected to what was the Ministry of Finance’s preferred approach whereby firms would prepay a percentage of taxes at the ports. This amount could be used as a credit when tax returns were filed by companies at the end of the tax year.
Dr. Davies said that although the CUF has now become an important source of revenue, which could not be abolished without putting an alternative in place, “the Government is cognizant of the fact that the existence of the CUF has a negative impact on domestic producers, particularly small and medium sized operations and this added cost is passed on to consumers.”
The Finance Minister said, therefore, that assuming that small to medium size enterprises import approximately $100 million of raw material and capital equipment in a year, then a $1.5 million expense allowance would be adequate to compensate for the imposition of the CUF.