What to know to about the new Jamaican Tax Portal to avoid unpleasant surprises
Iapplied for a National Contracts Certificate to qualify for a government bid. The requirements were a letter of Good Standing and TCC. There was a new system called the Revenue Agency Information System version #2, RAiS2 — soon to be RAiS3. It is promoted as the easy way to make returns. I tried to set up the accounts, but in order to apply for the TCC online, I had to go to the Tax Office to meet with a Compliance Officer. When I met with him he was a pleasant enough guy. He typed in some information and told me we what we owed and that we needed to pay it before we got our TCC.
The real cost of Tax Compliance
I was not alone. As a startup who helps startups with compliance issues, we had to be quoting costs of JMD110,000, JMD 35,000, JMD463,000 separate from our service fees, depending on how long the company has not set up S02 account. You may get the TCC if you can’t pay the bill, but you will continue to accrue interest daily until you pay and now there is proof that you accepted owing m0ney to the government whether you participated in taxable activities our not. There are a few ways you owe the tax office without engaging in taxable activities.
Minimum Business Tax
This is a tax introduced to widen the tax net on business and get non-performing companies off the books. In the event that the business does not make a profit you should still be entitled to pay something to the government. This took the form of a payment in June and September. This met outcry from business people from all income strata.
The Minister of Finance in November 2014, The Hon. Peter Phillips, responded in parliament that the Minimum Business Tax(MBT) would be exempt to Companies less than 2 years old. However if you were paying the Minimum Business Tax before it was announced, the tax would not have been credited to your account. Miss payments of the MBT and you could incur daily interest on the amounts you would have to pay. We’ve seen the interest waived by the cashier at the tax office, but now on the RAiS2 system the machine has no such mercy. Small businesses trying to be compliant would incur more losses.
S01 and S02
Whenever we go with clients to interviews with the compliance officers for that first TCC, the system forces us to do payroll filings without employees, this is a new idea because previously you did not have to have a payroll account without employees. The trivial way in which they mention that you have to start an S02 account in order to get your TCC does not prepare you for the tax bill you will receive in 24 hours. The interest starts accruing right a way. The TCC is a trojan horse and the Compliance Officer is disconnected from the appeal process. What recourse do we have to get this money back?
The easy way to trigger a tax audit
On the income tax return form IT01/IT02, you could report a net profit or net loss and the net loss carried forward from the previous year. If you fill the ‘net loss carried forward’ box you may immediately trigger a tax audit. Beware because even if you are up for it, tax audits are not the most objective exercise you will ever face, it seldom works in your favour.
Here is what you need to know
Get a tax portal account set up now. The sooner you do it the less penalties you pay. StartupRobot can help you with this.
Tax audits are no fun, but if you have a good accountant, you are making money this year and lost enough money last year that it could significantly reduce your tax bill this year then theoretically you can stick it to the tax man and claim the tax credit. Frankly, the cost associated with the tax audit and the internal audit to prepare may not be worth the tax credit. So take the tax officer’s advice and file nil return for the previous year if you made a loss.
Once the accounts are setup on the tax portal, check them every two weeks to make sure you address any messages they have put into the portal inbox. Those messages do not reach your email and missing deadlines incurs penalties.
There are only a few people in the Tax administration working in the Portal customer support. So when discrepancies come up, it takes a while to resolve. Save all the receipts of payments and be prepared to follow up with the tax office to make sure they update your account. For them it is a painstaking manual process.
When you file monthly PAYE, use multiple payments and pay each statutory return separately. DO NOT MAKE ONE LUMP SUM PAYMENT FOR THE PAYE. It will credit PAYE and not be reflected in each individual statutory. The user experience is still rough around the edges, but for them to correct it, we have found it takes weeks for them to reallocate your money.
And finally, if you have a company that is not performing. Take steps to close it down. If you don’t, the expenses you incur will catch up with you and you could face court charges, fines and jail time.
We would rather show you how to do this than do it for you, because your tax is your responsibility. We offer tutorials to get up to speed with this new system. Reach out to us and we can help you get on top of your online filings.
