Understanding the basic GCT changes
AS part of his Budget presentation tabled in Parliament on May 24, 2012 and the revised Budget tabled June 6, 2012, following consultations with stakeholders, Finance Minister Dr Peter Phillips announced a number of revenue measures. These included tax measures for General Consumption Tax (GCT) which would impact the general public as follows:
Reduction in the standard rate of GCT from 17.5 per cent to 16.5 per cent
In keeping with Government's commitment to the tax reform and ensuring a reduction of rates, the standard rate of GCT payable in respect to taxable goods and services was reduced by one percentage point effective June 1, 2012. Consumers will therefore pay one percentage point less when they buy taxable goods and services.
Partially widen the GCT base
* In an effort to broaden the tax base and reduce the administrative issues being experienced, several items previously listed as exempt or zero-rated will now attract GCT at the standard rate of 16.5 per cent. Consumers will now pay GCT on a wider range of goods and services.
* The items listed below are now taxable at the standard rate as at June 1, 2012.
* Flavoured milk, milk based products, condensed milk and milk substitute.
* Corn beef (canned).
* Pickled mackerel, herring, shad, dried salt fish.
* Buns, crackers (except water crackers), biscuits (salted and unsalted).
* All patties.
* Rolled Oats.
* Live birds, fish, etc.
* Animal feeds, pet food.
* Planting materials including cereals and seeds in their natural state, dormant flower bulbs, corns, roots and tubers and nursery stock, vegetable plants and live trees.
* Surgical gloves, including disposable, sterile and those made of latex rubber.
* Printed matter, articles and materials.
Amendment to the GCT regime as it relates to electricity
GCT will no longer be payable by residential customers, replacing the current arrangement of a 10 per cent charge on usage of electricity above a threshold of 200KWh. GCT rate for commercial customers will be increased from 10 per cent to the standard rate of 16.5 per cent. This measure will take effect July 1, 2012.
GCT & taxpayers - What you need to know
With the new GCT tax measures introduced as of June 1, 2012 the public is reminded of how GCT is applied.
* Businesses with annual sales of more than J$3m are required by law to register as a GCT taxpayer and to charge GCT. As a registered GCT taxpayer, such business persons are entitled to set-off GCT paid when they buy goods against GCT collected from goods sold and to file a GCT return by the end of the month following the period. For example, GCT for May would be due at the end of June.
* Only registered GCT taxpayers who are issued with a valid GCT Certificate are authorised to collect GCT. The law requires that such entities collecting GCT must prominently display their GCT Certificate.
* Customers are therefore cautioned not to pay GCT to non-registered taxpayers. GCT is not to be paid on any item unless the business person can prove that he/she is registered for GCT by displaying/showing the GCT Registration Certificate.
The Talking Tax series is prepared by the Communications Unit of Tax Administration Jamaica (TAJ) to guide the public on their rights and obligations. To get additional information on this or any other tax matter, persons may contact 1-888-TAX-HELP (829-4357) or www.jamaicatax.gov.jm.