Senate passes minimum business tax
Government senators yesterday dismissed suggestions for loss-making businesses to either be allowed to claim tax credit on the Minimum Business Tax in the subsequent year of operation or not be required to pay interest to the tax authorities if they fail to come up with the $60,000 per year that is required under the regime.
The tax is applicable to all businesses with annual revenue above $5 million and can be claimed as a credit for income tax.
Opposition Senator Marlene Malahoo Forte argued that where businesses have not made a profit, they should be exempted from the penalty of 1.5 per cent interest per month.
The tax is payable in two tranches on or before June 15 and September 15 each year. There is a grace period of 15 days, after which the penalty is accrued.
"I am not saying that the tax should not be paid because in the circumstance of carrying out business, certain services are consumed, and I understand, notwithstanding the burden, it is important that a contribution be made to the public purse to ensure that Government can do what it is elected to do," Malahoo Forte said.
"We should not proceed in imposing a tax liability from the perspective that all persons who do not pay are cheats or they intend to cheat the revenue."
Under the Minimum Business Tax Act, start-up businesses will not be required to pay the tax until after two years of operations. At the same time, businesses will not be required to pay the tax unless their gross sales exceed $5 million per year. The House of Representatives earlier this month approved changes in the tax regime, which, when introduced last year, saw the tax being charged on revenue above $3 million.
Piloting the bill through the Senate yesterday, Justice Minister Mark Golding noted that the businesses that pay the $60,000 will have it reflected as a tax credit for income tax purposes. Responding to Malahoo Forte, he said that the fact that a loss has occurred is irrelevant once the principle of the tax has been accepted.
"You must pay the tax. It is a cost to doing business. It is a modest tax, and I don't think we want to encourage people not to pay it by waiving that penalty," the minister said.