Accountants say new tax laws will be ignored by many
Tameka Gordon, Business Reporter
Omnibus legislation passed in December is expected to lead to more companies becoming tax compliant because of the incentives which have been included.
However, some accountants say the tax incentives may not lead to the anticipated move toward compliance for many companies.
Large accounting agencies as well as smaller firms say they do not anticipate a run on their services come tax season due to the passing of the new laws which, among other incentives, promise companies rebates on tax based on statutory deductions paid over.
"What we have to understand is that even if you say to people come in and file your taxes and you give an incentive for them to become compliant if they have back taxes, they just don't have the money to pay these back taxes so they are just not going to come in," principal of accounting and auditing firm Boldeck Jamaica Limited, Orville Christie said.
The accountant reckons that micro, small and medium-sized entities which "are barely breaking even and are operating from hand to mouth will just try to remain below the radar."
Christie told Sunday Business: "I know several hairdressers who have gone out of business because they can't pay the taxes. They want to be compliant but the demand for (their) services is just not there."
"If you're running a business and you are living hand to mouth, taxes are going to be the last thing on your mind, though I advise my clients to be compliant. The environment in which they have to operate is a hindrance to business growth and, therefore, filing taxes will be an issue for them," the accountant said.
"If there are no sales then there is no profit. If there is no profit then there is no business, hence no money for taxes," he argued.
For KPMG's managing partner Tarun Handa, the tide created by the passage of the legislation will be short lived.
"We see this working itself out in the next four to five months. If companies haven't assessed their positions under the system by the end of March, then they are potentially not going to be a part of the system," said Handa.
While noting an increase in the number of enquiries concerning the implications of the legislation, Handa said "I think there will be a lot of advisory work" but that will go until March.
Both KPMG and Ernst & Young (EY) have advertised for additional staff members but say they do not anticipate increased business as a result of the legislation since their client bases were already compliant.
"We are an audit firm so as a big four firm we don't expect to see any change. I don't expect to see anymore work coming from it because the companies we deal with are already compliant," managing partner of EY Jamaica, Allison Peart, said.
Christie said smaller firms have seen growth in their business but not as a result of the passage of the legislation.