Mon | Oct 26, 2020

Letter of the Day | Fix mixed messages on GCT, Dr Clarke

Published:Saturday | September 14, 2019 | 12:00 AM


In his recent Budget presentation, Dr Nigel Clarke announced with much fanfare that businesses doing less than $10 million in sales annually would no longer be required to make GCT returns.

The reason cited for the deregistration of these businesses was to make life easier for small taxpayers and to reduce the burden on them.

It was quickly pointed out to the minister that this deregistration would actually put some small businesses at a severe disadvantage.

The minister swiftly put such businesses at ease and assured the public that any business wishing to remain registered could write a letter of objection.

One would think that Tax Administration Jamaica (TAJ) would facilitate the continued registration of small companies that want to exercise this option since deregistration means a loss of revenue to the department, but that has not been the case.

TAJ has responded by informing small taxpayers who have objected that they have been deregistered and should return their GCT ­certificate within 14 days or risk imprisonment and/or being fined.

The position of TAJ seems far removed from the public announcements of the minister.

Those not involved in commerce may not understand why a small business would want to remain registered. The main reason is profit. Being deregistered doesn’t mean that a taxpayer no longer pays GCT. It only means that they can no longer charge it. Therefore, a small business that enjoys a 20 per cent profit margin, and is selling to a GCT-paying entity, would have that margin reduced to 3.5 per cent if it was to absorb the cost of GCT into their prices.

No one wants to earn less, and one would think that TAJ would understand this, but it does not seem so. Their representatives’ solution to this problem is the taxpayer increasing their prices! Of course, this is not a viable option as this would make them uncompetitive and could even threaten their very existence.


If a small business is supplying goods or services to the end user, deregistration is a very attractive option. If, however, a small business is supplying goods or services to someone who is reselling them, GCT registration is critical as that entity will be claiming it back. The result of deregistration in these instances will be big businesses avoiding trading with small ­businesses. This certainly was not the intention of the honourable minister of finance, and I urge Dr Clarke to intervene before ­immeasurable harm is done to some small-­business people.

Small businesses must not be limited to doing business with other small businesses. We must have a level playing field so that prosperity is not limited to those who have already achieved it.