TAX Administration Jamaica (TAJ) is now imposing a penalty of 1.5 per cent on the balance of companies that fail to file their General Consumption Tax (GCT) returns within the month they are due.

The decision, which is facilitated by a recent amendment to the General Consumption Tax Act, is aimed at “improving the government’s cash flow position”, TAJ’s Communication Director Meris Haughton told the Jamaica Observer.

Amendments to the GCT Act have also seen a reduction in the interest rate charged on the outstanding balance of GCT returns from 2.5 per cent monthly to 1.5 per cent. The reduction reflects an effort to harmonise interest rates across all tax types, according to Haughton.

Under the new payment regime, businesses will have up until the last working day in the following month to file their returns.

Up until October this year, businesses had up to one month to clear previous balances before any penalties could be incurred. However, the new policy is expected to help the Government to meet its GCT revenue target of $16.6 billion for the month of October.

Economic indicators for the month of September showed that while the Government surpassed the International Monetary Fund’s (IMF’s) tax revenue target of $166 billion, the amount fell $10.4 billion short of the Government’s budget for the month.

Local GCT was identified as one of the major tax underperformers, having posted a shortfall of $3 billion. Special Consumption Tax (SCT) and GCT on imported goods also accounted for shortfalls of $1.2 billion and $1.5 billion, respectively. Meanwhile, revenue from corporate tax posted the largest shortfall of $4.7 billion.

In August, TAJ made it mandatory for local companies to make ‘third party reports’ on firms with which they do business as an attachment to their normal filing procedure.

“The reports should enable the collection agency to conduct checks on all listed suppliers, to ensure that they are registered, and are filing the correct amount on their tax returns,” Haughton said.

The first batch of these reports was received last month and is currently being analysed, with the aim of strengthening the Government’s fiscal position by December.