Tax of the lands

By Sherry-Ann McGregor

Usain Bolt's recent successes in London have made him even more popular than he was after the Beijing Olympics - if that is even possible. No doubt, organisers and spectators alike are willing to pay premium prices for him to participate in track meets around the world. Effectively, Bolt could become more selective about where he works, because the demand for his presence is so high.

The recent media report that he has refused to participate in a meet in London is nothing new. He has done this since 2010 and joins athletes such as Rafael Nadal who have chosen not to participate in activities in the United Kingdom (UK) in order to avoid the onerous tax laws which would require them to pay taxes on prize money, appearance fees, as well as a percentage of global endorsements proportional to the time spent in the UK.

This is typical of the constant struggle between Government's desire to maximise tax revenues and the law-abiding taxpayer's objective to obey the law while avoiding taxes, where possible. Therefore, in the case of that athlete who has the option to perform in a country where only his income earned in that country is taxed as against performing in London, the choice is obvious.

The ever-shrinking global economy has given more persons the opportunity professional athletes have to earn incomes in foreign countries. When this happens, knowledge of the way in which income will be treated in that country, how it will be treated in Jamaica and whether there are any agreements between Jamaica and that country in relation to taxes will help to determine the feasibility of the venture. It may be necessary to obtain specific tax advice.

Jamaican residents who earn any portion of their income outside Jamaica should have more than a passing acquaintance with the provisions of the Income Tax Act and any double taxation agreements between Jamaica and other countries. Jamaica has agreements with several countries, such as the UK, Canada, Caricom countries, Denmark, France and China, which prevent taxation of income in the country in which it is earned as well as the country of residence.

The agreements usually stipulate the nature of the income and the rate at which that income should be taxed in the country in which it is earned. In this way, the Jamaican resident will be credited with the amount paid for taxes in that country and will not be required to pay the full amount of taxes in both countries. For example, taxes on royalties do not exceed 15 per cent in any of the countries with which Jamaica has an agreement.

It would be prudent for persons who earn incomes in foreign countries to obtain professional tax advice regarding the impact of any double taxation treaty agreements on the income so earned, as it could serve to relieve a portion of the tax burden. There may also be other tools and structures which could help them to maximise their income without running afoul of any tax laws.

Sherry-Ann McGregor is a partner and mediator with the firm Nunes, Scholefield, Delon and Co. Send Feedback and questions to lawsofeve@yahoo.com or lifestyle@gleanerjm.com