Jamaica Confirms New Withholding Tax

by Mike Godfrey, Tax-News.com, Washington

26 May 2015

Jamaica's tax authority has announced that a withholding tax on specified services will be introduced from June 1, 2015.

The regime will be introduced on a phased basis. During an interim phase, only Government ministries, departments, and agencies; financial institutions regulated by the Financial Services Commission or the Bank of Jamaica; tourism operators; and utility and cable companies that gross more than JMD500m will be required to withhold three percent tax from payments made on specific services with an invoice value of JMD50,000 or more.

The agency said that despite the introduction of the new levy, affected taxpayers are still required to file annual and estimated income tax returns and meet their quarterly tax obligations. Taxpayers will be able to claim a credit against these withholding tax payments, and any excess credits will be refundable on a taxpayer's final return.

The introduction of the new WHT is intended to improve compliance rates, as the agency is concerned that persons are under reporting or not registering to report their tax liability.

Withholding taxes are already widely used in Jamaica, for the employment pay-as-you-earn levy, payments to non-residents, the contractor's levy, and the general consumption tax on government purchases.

The Government said that withholding taxes have proven effective in boosting compliance rates over the years.

Guidance notes explaining the new regime have been released on the tax authority's website.

TAGS: compliance | tax | Jamaica | tax authority | withholding tax | services | Tax