Employment tax credit takes effect
Unregulated companies and self-employed individuals engaged in a trade, vocation or profession are now entitled to claim a non-refundable Employment Tax Credit (ETC) when computing their net income tax liability.
The Employment Tax Credit, which became effective on January 1, forms part of the Government's fiscal incentive regime. However, to qualify for the credit, eligible persons will need to file and pay their monthly payroll statutory deductions on time.
"The amount of ETC which may be claimed in respect of each year of assessment will be equivalent to the total amount of payroll deductions and contributions for Education Tax, NHT (National Housing Trust), NIS (National Insurance Scheme) and HEART (Human Employment and Resource Training), which have both been declared and paid on time for employees during that year," Tax Administration of Jamaica (TAJ) said in a release.
Eligible persons are therefore encouraged to file and pay their monthly payroll deductions on a timely basis in order to benefit when filing their final income tax return, the agency said.
TAJ said the ETC will be restricted to 30 per cent of the tax chargeable on the company's or trader's income and may not be claimed against any income tax chargeable on non-trading income, such as interest and dividend income.
The 25 per cent tax charged on interest and dividend income will continue to be applied, TAJ added.
While the ETC will benefit compliant businesses, it should also serve to encourage greater tax compliance and boost employment, the release said.