Tue | Jan 28, 2020

Manufacturers could get GCT refund on imported inputs

Published:Wednesday | July 30, 2014 | 12:00 AM

Daraine Luton, Senior Staff Reporter

Brian Pengelley, president of the Jamaica Manufacturers' Association, said the proposed amendment to the General Consumption Tax (GCT) Act to introduce a mechanism for manufacturers to claim refunds will make local producers more competitive.

The amendment, for example, will see manufacturers of baked goods being able to claim inputs for imported products, putting them on the same playing field as importers of baked goods who pay no GCT on the finished product.

"It means for the sector that local producers of exempt goods will be competitive with the imported finished items," Pengelley told The Gleaner yesterday. "We will now have a more level playing field and be able to compete with imported products," he said.

Finance Minister Dr Peter Phillips was yesterday scheduled to open debate on the bill and pilot through all its stages in the House, but this was not done. As a result, the bill will not be debated until the legislators return from the summer recess in September.

In addition to the GCT refund clause for manufacturers, the GCT bill is to be amended to, among other things, make it easier for the State to collect duties that have been levied on imported services such as consultancy.

Phillips had announced the tax on imported services as he closed the Budget Debate in the House of Representatives in April. This is was one of two measures that replaced an earlier proposal to impose taxes on bank transactions.

Section 23B of the GCT Act is to be repealed and is to be replaced by a section that outlines a regime for the collection of taxes on imported services. The section states that where a taxable activity consists of the supply of imported services by a person who is not a resident in Jamaica, the recipient of those services shall, for the purposes of that supply, be deemed to be a registered taxpayer and shall pay the tax chargeable in respect of that supply to the commissioner of inland revenue.

The proposed replacement for the section splits the service importer into the categories of a registered taxpayer and an unregistered taxpayer.

But that is as far as the distinction goes. The importer, whether or not he is a registered taxpayer, shall, in respect of imported services that are received by the service importer, be deemed to be the supplier of those services and be liable to pay the tax payable in respect of the supply of those services.

The bill further proposes that he be required to file a return to pay the amount of the tax.

The requirement to file does not apply to a person who in the 12 months preceding the importation of the service makes supplies that have an aggregate value of less than $3 million, excluding the imported service.

There is also no requirement to pay or file tax returns if the service was imported for personal use.