Thu | Mar 21, 2019

PAYE taxes not being paid on time

Published:Wednesday | February 19, 2014 | 12:00 AM

ONLY 28 per cent of PAYE taxes are being paid over on time, and it sometimes takes the Government up to six months to collect 60 per cent of those taxes after they become due.

The revelation was made before Parliament's Committee on Tax Measures by Ainsley Powell, acting commissioner general of Tax Administration Jamaica (TAJ).

"A good portion of it is collected plus one, plus three months (one to three months) after due date," Powell said.

PAYE, which is deducted at source by the employer, is to be paid over to the tax authorities. The tax type, which contributes 20 per cent of total revenue, is underperforming by $2.6 billion, reflecting $46.1 billion of the $48.7 projected for the April to December period.

not supported by the data

Committee member Mikael Phillips, who was posing questions to Powell, said persistently blaming unemployment for the low PAYE collections is not supported by the data.

"The notion that it is because of the unemployment rate ... it is really those companies that are not filing and paying over what they have collected on time," Phillips said.

"If we are going to meet our revenue targets, then everybody has to be on board. I understand the issue of using it for cash flow, but if we are lagging six months behind in the payments, we are in trouble," Phillips said.

Powell said the TAJ had been targeting persons who had a history of paying late and not paying over the full amount of taxes due. He said the TAJ had found that taxpayers had been paying less because of unemployment issues. He also said the threshold increase relative to salary increases had also affected PAYE collections.

The TAJ head said there had been a significant improvement in the compliance of government ministries, departments, and agencies in the payment of taxes. He said measures introduced this year had resulted in non-compliance not being "as major a problem as before".

In the meantime, flat tax of $60,000 applicable to professionals and companies excluding start-ups in year one of operation, which was passed by Parliament in 2012, is yet to be implemented.

Powell said the absence of legislation has prevented TAJ from seeking to collect the tax from professionals such as lawyers and accountants, plumbers, and all self-employed persons above the income tax threshold.

Persons earning $507,312 per year or below are exempted from income tax.

Powell also said the TAJ would be utilising third-party information to identify self-employed persons who may be avoiding taxation.

- D. L.