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TAJ promises automation of withholding certificates soon

Published:Friday | July 18, 2014 | 12:00 AM

Avia Collinder, Business Reporter

Chief Technical adviser at Tax Administration Jamaica (TAJ), Norris Miller, says the process of supplying withholding certificates for GCT is soon to be automated.

Additionally, arising from recent discussions with the Jamaica Manufacturers' Association (JMA), the Financial Gleaner understands that a short-term fix has been suggested for the period during which certificates are not immediately available.

Until the process is automated, companies doing business with government bodies have been advised that they should receive a physical certificate within 15 days of sale.

Failing this, they can put off reporting the return until they get the certificate. Returns can be done when the certificates are received.

What is currently in law is a reporting period of 30 days. The suggested fix is expected to be discussed in Parliament next week.

The withholding certificates were instituted with the June 1 elimination of the zero-rated GCT policy for government entities.

Without the fix negotiated with JMA, the company would have had to account for the tax without credit.

TAJ Director of Communications Meris Haughton says the go-live date for automation is August 25.

Miller says each agency, department or ministry of government - MDAs - will be responsible for issuing withholding certificates.

Until the system is automated, MDAs will have to print certificates, fill them out and give them to suppliers.

"But within a month or two, they will just enter an invoice number, and a certificate will be automatically generated. They can then email or otherwise give to the supplier," the technical adviser said.

Under the general GCT regime, the buyer of a good or service typically pays GCT to the supplier, who remits it to the Tax Department.

However, for MDAs, the procuring entity will not pay the GCT, but will present a withholding tax certificate "to say, 'I am withholding the GCT you have charged and I am going to pay it over to the tax authority on your behalf'," Miller said.

He said one witholding certificate can carry up to 30 invoices within a month.

"It is designed in such a way that one withholding tax certificate can carry several invoices. The agency has 30 days within which to provide the certificate. They may, during the period, get one certificate for all invoices," said the technical adviser.

"At the end the month, the MDA will file the GCT tax return with the 16.5 per cent payment to the TAJ," he said.

Meantime, the original objection by the JMA to the newly proposed delay for refunds to local manufacturers for tax on raw materials and capital goods may also be moot.

Under a newly proposed bill, credit would accrue monthly but the refunds would be given after the fifth month. However, manufacturers had objected saying refunds could by delayed by as much as two years.

It's now understood that following discussions between JMA and policymakers, Government is now considering refunds in the same month.

This proposal is also expected be tabled for discussion during the coming week.