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Jamaica Notes VAT, Capital Allowance Regime Changes

by Mike Godfrey,, Washington

21 July 2014

The Jamaican tax authority is reminding General Consumption Tax (GCT)-registered taxpayers that goods and services provided to Government bodies should now include tax; input tax credits became available from July 21, 2014.

The new GCT policy, which came into effect on June 1, 2014, requires government entities to pay GCT on purchases. Under Jamaica's regime, businesses with a turnover of at least JMD3m (USD26,750) must register for GCT, a value-added tax. GCT charged on supplies to government bodies should now be included on GCT returns, starting with June GCT returns, due by the end of July. A new GCT return has been introduced to accommodate this change.

Jamaica has also recently increased capital allowances for businesses, which allow for the writing off of a portion of expenses incurred on the purchase of a capital asset. As a general rule, capital expenditure on specified assets incurred on or after January 1, 2014, will now be written off using the straight-line method.

Capital allowances for industrial buildings have been increased to 20 percent, and the definition of industrial buildings has been expanded. Write-off rates for non-industrial buildings have been increased from 2.5 per cent to 4 per cent.

The allowance for machinery used directly in the production of primary products or in the manufacture and automated packaging of goods has been increased to 25 percent.

Business operators using a private motor vehicle, as opposed to a trade vehicle, can access increased capital allowances. For private vehicles, the allowable base cost on which the annual allowance of 12.5 percent is calculated has been significantly increased to USD35,000. Persons using a trade vehicle, such as a pick-up truck, will benefit from an increase to 20 percent in the annual allowance rate.

The new capital allowance regime also makes provisions for annual allowances for intellectual property rights.

TAGS: compliance | VAT tax authority guidance | VAT registration / deregistration | tax | business | value added tax (VAT) | sales tax | intellectual property | copyright | Jamaica | tax authority | internet | trade | services | VAT compliance matters | Tax

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