place where they are physically performed and the performance of the services takes place outside of Jamaica, are generally taxable at a rate of zero percent.
Transfer of a going concern. Normally the sale of the assets of a VAT-registered or VAT-registrable business will be subject to VAT at the appropriate rate. However, a transfer of a business as a going concern (TOGC) may be zero-rated under certain conditions. A TOGC is the sale of a business or part of a business capable of separate operation including assets. Where the sale meets the conditions, the supply is treated as zero-rated. In Jamaica, a TOGC is treated as zero-rated where the following conditions are met:
• The sale, transfer or other disposition of the activity is from one registered taxable person to another
• The activity is a going concern at the time of the sale, transfer or disposition
• The assets to be sold, transferred or otherwise disposed of are intended for use by the new owner in carrying on the same kind of business
• There shall not be a series of sales, transfers or other disposition of the business
• There is no significant break in the normal trading pattern before or immediately after the sale, transfer or disposition
• Both parties to the transaction agree in writing that there is a supply of a going concern
• Both parties of the transaction intend that the activity is capable of being carried on as a going concern by the purchaser
• There is a supply of all the assets that are central to the taxable activity or part thereof that is the subject of the sale, transfer or other disposition
Transactions between related parties. As a general rule, supplies between related/connected parties should be at market value. Where there is no consideration for such transactions, the value of the supply will be taken to be the open market value.
C. Who is liable
All persons engaged in a taxable activity in Jamaica whose annual turnover exceeds JMD10 million (approx. USD64,000) per year are required to register for GCT as a registered taxable person.
Exemption from registration. Anyone who is engaged solely in one or more of the following, does not have to register for GCT in Jamaica:
• Persons whose annual turnover are below JMD10 million (approx. USD64,000)
• Persons whose activities are carried out essentially as a private recreational pursuit or hobby
• Any engagement (i.e., employment), occupation or employment under any contract of services or as a director of a company
• Persons who supply only goods and/or services that are exempt from the GCT
Voluntary registration and small businesses. A person with gross revenue of under JMD10 million (approx. USD64,000) may voluntarily apply for GCT registration.
A person who proposes to carry on a taxable activity (not under a partnership) may apply (using the prescribed form) to be provisionally registered for GCT as a registered taxable person. Note that TAJ may require other documents prior to approving such a registration, for example, the requirement to provide a deposit for security. If the application is approved, the taxable activity by the business, must begin within 24 months of being registered.
Group registration. Group GCT registration is allowed in Jamaica. The entities in the GCT group must also be Jamaican entities (including branches of overseas companies) and must be affiliated with every other entity within the GCT group. There are several other requirements.
All members of a GCT group in Jamaica are jointly and severally liable for GCT debts and penalties. Within the GCT group, each member is jointly and severally liable for any tax payable
GCT rate on certain goods would be higher because the 5% advance payment would be in addition to the standard rate.
Examples of goods and services taxable at 10%
• Certain services provided by certain entities in the tourism sector including the following:
– A hotel – A resort cottage – Tour operators
– Water sports
Examples of goods and services taxable at 25%
• Telecommunication services, including the sale of telephone cards
• Telephone instruments
The term “exempt supplies” refers to supplies of goods and services that are not liable to GCT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Certain energy saving devices, e.g., LED bulbs, solar panels and tubes for solar water heating systems and lighting control units
• Construction services as defined, e.g., demolition, repair or alteration of any building or the construction, repair or alteration of part of a land
• Imported chicken, which is not subject to any process other than freezing, chilling, salting or otherwise immersion in a brine solution or packaging
• Brown sugar
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Jamaica.
E. Time of supply
The time of supply is important in determining when a taxable supply takes place for GCT purposes. The GCT Act defines the “time of supply” as the earliest of the following events:
• When an invoice for the supply is issued by the supplier
• Payment is made for the supply
• The goods are made available to the recipient, or the services are rendered
Deposits and prepayments. The time of supply for deposits and prepayments is when the deposit or prepayment is made.
Continuous supplies of services. For contractually agreed continuous supplies of services that provide for the consideration to be paid from time to time upon the supplier issuing invoices, the time of supply takes place at the earlier of following:
• An invoice for the supply is given by the supplier
• Payment is made for the supply
• Payment for the supply becomes due
Goods sent on approval for sale or return. The time of supply for the supply of goods sent on approval for sale or return is considered to be when the goods are made available to the recipient.
Reverse-charge services. There are no special time of supply rules in Jamaica for supplies of reverse-charge services. As such, the general time of supply rules apply (as outlined above).
Leased assets. For assets supplied under hire purchase or lease agreement, either with or without an option to purchase, the supply takes place when the goods are made available to the recipient.
Imported goods. There are no special time of supply rules in Jamaica for supplies of imported goods. As such, the general time of supply rules apply (as outlined above).
Supplies to nontaxable persons. A registered taxable person who makes a taxable supply to a person who is not a registered taxable person is required to show the consideration for the taxable supply separate from the GCT by either issuing a receipt showing the consideration and the GCT payable or affixing to the taxable supply the consideration and the GCT payable.
Records. Registered taxable persons are required to keep accounts and records as prescribed by the GCT Act. In Jamaica, examples of what records that must be held for GCT purposes include financial statements, trial balance, invoices, etc.
In Jamaica. GCT books and records can be kept outside of the country. However, if records are held outside of Jamaica, such records must be available in a timely manner, at the request of TAJ.
Record retention period. Registered taxable persons must keep books and records for at least six years from the end of the taxable period to which they relate. The books and records that should be kept are based on best practice.
Electronic archiving. Electronic archiving is allowed in Jamaica. Records and books of accounts can be kept in an electronic format, as long as they are retrievable when requested by TAJ.
I. Returns and payment
Periodic returns. The GCT reporting period is monthly. Returns must be filed by the last working day of the month after the end of the taxable period.
Periodic payments. Any tax due for the GCT reporting period must be remitted to the TAJ by the last working day of the month after the end of the taxable period (e.g., GCT payable for June 2023 is due the last working day of July 2023). Payment can be made by check, wire transfer, cash or credit card. All payments can be made at any TAJ’s offices. Payments can also be made online at https://www.jamaicatax.gov.jm.
Electronic filing. Electronic filing is mandatory in Jamaica for all taxable persons. All registered taxable persons are required to file their GCT returns online with TAJ (https://www.jamaicatax. gov.jm).
Payments on account. Payments on account are not required in Jamaica.
Special schemes. Import deferral scheme. The Commissioner General may grant approval (on such terms and conditions as they consider fit) for the importation of specific goods by a registered taxable person without the payment of GCT to the Commissioner of Customs at the time of importation. The registered taxable person must be up to date and compliant with the required GCT filings and the other GCT payments. If approved, the GCT would be deferred and accounted for by the registered taxable person when filing the GCT return for the taxable period in which the specified goods were imported.
Cash accounting. Only specific taxable persons can file using cash accounting, including, but not restricted to, taxable persons who supply general insurance, professional services and telephone services. The GCT Act specifies the categories of taxable persons that may be permitted to account for GCT on the cash basis, on the written approval of the Commissioner General.
Annual returns. Annual returns are not required in Jamaica.
Supplementary filings. There are no supplementary filings required in Jamaica.
Correcting errors in previous returns. The GCT legislation specifies that a registered taxable person may, after filing a GCT return, request the Commissioner to amend that return and the Commissioner shall do so if satisfied that the amendment is required. However, an amended return is generally filed to accommodate major changes or amendments to a return that was previously filed (such as the correction of an error).
To amend a previously filed return, a new return must be filed by a registered taxable person and the revised return box on the GCT form should be ticked before submission to the TAJ.
Digital tax administration. There are no transactional reporting requirements in Jamaica.
J. Penalties
Penalties for late registration. A person who fails to register for GCT is subject to a penalty of the greater of JMD10,000 or the tax that would have been payable had the person been a registered taxable person during the applicable period. Interest (compounded) will be applicable at the rate of 16.6% per annum.
Penalties for late payment and filings. Late payment of GCT attracts a penalty of 10% of the amount unpaid and interest at the rate prescribed by order made under Section 2A of the Tax Collection Act until the date of payment (compounded). Late filing of a GCT return attracts a penalty of the greater of JMD10,000 or 10% of the tax, which is due up to a maximum of JMD100,000, and interest at the rate prescribed by order made under Section 2A of the Tax Collection Act until the date of payment. The current prescribed interest rate is approximately 16.6% per annum.
Penalties for errors. There are no specific penalties in Jamaica for errors. The penalty and interest charges that would apply are dependent on the impact of the error on the GCT payable for the relevant period. If there is additional GCT payable, the regular charges (described above) would apply.
There are no specific penalties associated with the late notification or failure to notify TAJ of changes to a taxable person’s GCT registration details. For further details, see the subsection Changes to GCT registration details above.
Penalties for fraud. Criminal penalties may apply for fraudulent conduct. The person would be liable on summary of conviction in a Residents Magistrates Court to a fine as determined or to imprisonment or to both a fine and imprisonment. The fine can range from JMD1 million or three times the tax payable if greater, and imprisonment is usually for a term not exceeding 12 months.
Personal liability for company officers. The GCT Act specifically states that the managing director, manager or other officer concerned in the management of a body corporate will be liable for offenses, unless at trial they can prove that the offense was committed without their knowledge. The penalties that may apply are outlined in the subsection above Penalties for fraud.
Statute of limitations. The statute of limitations in Jamaica is six years.