TAX Administration Jamaica (TAJ) says between late 2018 and this year it has hauled 10 businesses before the courts for collecting General Consumption Tax (GCT) from customers without being registered to do so, and pocketing the monies instead of turning them over to the Government.

Action taken by the TAJ against the entities — which are located in Kingston, St James, Clarendon, and St Catherine — have led to fines of $6.355 million being imposed by the Revenue Courts for the breaches. Another four, the authority said, are before the courts awaiting resolution.

Under the General Consumption Tax Act, “a person, not being a registered taxpayer, who collects tax commits an offence and is liable on summary conviction in a Resident Magistrate’s Court to a fine not exceeding $5M, or to imprisonment for a term not exceeding 12 months or to both such fine and imprisonment”.

According to the TAJ, any person who, while not being a registered taxpayer collects GCT, or any registered taxpayer who collects GCT and fails to remit same to the tax authority, or who fails to report their correct income, profits or gains as defined within the Income Tax Act, or who fails to comply with any notice or request under any law the authority administers, will face enforcement actions.

Head of the TAJ’s Communication Unit Meris Haughton, in a recent interview with the Jamaica Observer, said the authority’s “compliance efforts have been stepped up along with the support from the TAJ’s legal unit to ensure that [it] protects the Government’s revenue”.

“It is a concern we have, which is why we approach it from several angles. There is the opportunity we give persons if they fail to file or report within a certain time — we send them reminders and then we escalate the compliance activities. Our last resort is to go through the court, and this is normally where we have used other measures to try and get persons to comply,” Haughton said.

“Remember that we also get information from third-party sources which helps us determine what a person’s true picture compliance obligation is. Where persons fail to comply, even after we show them evidence and so on, then we go the next step, which is to use the courts,” she added.

In the meantime, Haughton is reminding consumers that “they, too, have power in their hands”.

“If you go to an establishment and they are charging you GCT, you can ask to see their GCT certificate. Everybody who is authorised as a GCT taxpayer has a certificate and that certificate says, ‘I am authorised by Tax Administration Jamaica to collect GCT on their behalf,’ and they are also to give you a GCT receipt — so that invoice that you get must reflect the GCT that is charged,” Haughton explained.

“So they can’t be charging you GCT and then you step away and you don’t get a receipt from them. You can actually check to see if somebody is actually registered, too. Apart from the GCT certificate that they are obliged to display, you can also ask them for their GCT number, and you can log on to the TAJ’s website and plug in that number to confirm if this person is a registered GCT taxpayer,” she said further.

Consumers, she said, can also call the TAJ’s tax cheat line if they suspect that a business operator is cheating — whether from a GCT or payroll perspective — and deducting or collecting and not paying over.

“You can contact our customer care centre at 1-888-TAX-HELP (829-4357) or call our Tax Cheat Line (1-888-292-4328). We have a team of investigators that do take these reports quite seriously. We investigate every report that we get and where persons are found to be in breach, we will take steps to address same,” she said.

In March this year the TAJ hauled New Kingston restaurant Ultimate R&R Enterprize Director Owen Reid before the Sutton Street Tax Court in downtown Kingston on three counts of breaches of Section 56 (5) of the GCT Act, for collecting GCT without being registered to do so. The businessman, who pleaded guilty on all three counts, was fined $400,000 on each count, a total of $1.2 million in fines, and ordered to pay the amount before April 20.

The business was operating from 2016 but the TAJ only prosecuted for 2022. It said $4.9 million in GCT was what was collected by the business for that period. Reid, however, is only obligated to turn over the tax payable after he deducted his input tax (GCT paid on business purchases and expenses) from the amounts collected.

At Reid’s court appearance his attorney said that his client had paid over $1.9 million before his court appearance, explaining that he had taken over the business from other relatives when he realised that they had not been paying over GCT collected. He said his client was now a registered GCT payer and has hired an accountant to ensure that payments are made going forward.

“I believe the actions of my client speak for itself. This is not a man who is not a respecter of the law. The speed with which he has moved to regularise his situation speaks volumes. The sums paid were taken from his capital,” the attorney said.

Judge Christine McNeil, in scolding the entrepreneur, said, “Collecting GCT without being registered to do so is an offence. You can’t be collecting money from customers in terms of GCT and not turning it over where it’s supposed to go. If you are going into business you must know what the requirements are.”

The TAJ said it prosecuted one individual in 2018, four in 2019, one in 2021, three in 2022, and one so far for 2023.