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Highlights:

  • Clients are asked to send to KPMG the information for the preparation of their 2019 income tax return by January 31, 2020.
  • Mandatory e-filing requirement of certain 2019 income tax returns for individuals as of January 2, 2020.
  • In the year of assessment 2019, minimum business tax was abolished and the assets tax regime was modified to exclude non-financial institutions.
  • Clients may grant third party access to KPMG on the Revenue Administration Information System (“RAiS”) to allow for uploading of returns.
  • Reminder to complete the Schedule 8 – Declaration of Connected Person Transactions (Transfer Pricing regime).
  • Penalty of $5,000 per month for late filing of income tax returns.
  • Mandatory e-filing requirement for all corporate income tax returns.

 

Income Tax Returns

We wish to remind clients who have not yet filed their income tax returns for the year of assessment 2019 and declarations of estimated income tax payable for the year of assessment 2020, that the deadline for filing these documents is March 16, 2020 since the March 15 deadline falls on a Sunday.  Additionally, any income tax due for the year of assessment 2019 and the first quarterly instalment of estimated income tax for the year of assessment 2020 are to be paid by March 16, 2020.

As such, we look forward to receiving all of the necessary information to prepare the returns and declarations no later than January 31, 2020.

Tax Administration Jamaica’s (TAJ) RAiS is automatically imposing interest on overdue income tax.  The current rate of interest is approximately 16.04% per annum, but this may be changed by the March 2020 filing date.

 

Mandatory e-filing of certain income tax returns for individuals

 

Effective from January 2, 2020, it is mandatory for certain individual taxpayers to electronically file their income tax returns.  These individuals include employed persons with other sources of income, self-employed persons and pensioners, who will file the following returns:

  • Return of income and tax payable individuals (PAYE, pensioners etc.) ( IT05)
  • Self-employed person annual return of income, taxes and contributions payable (S04) with no income tax liability or refund claims.

We encourage individual clients, especially those with no income tax liability in the past, to apply for an account on the RAiS platform as soon as possible.  If you need our assistance in this process, please contact us.  

 

Minimum business tax has been abolished and assets tax modified

 

We wish to inform clients that the minimum business tax was abolished in 2019. 

In addition, the assets tax regime was modified to exclude non-financial institutions.  As such, all entities that are non-financial institutions are not required to pay assets tax.  Financial institutions will continue to pay assets tax at the specified rate.

 

Granting third party access to KPMG

 

Clients with an account on the RAiS platform may grant KPMG third party access to their account to facilitate uploading of the returns for approval and submission by them.

Note that although KPMG can upload the return forms, the documents are not received by TAJ until the client submits same electronically.

Clients without an account on the RAiS platform may contact KPMG or TAJ for assistance in setting up same.

 

Schedule 8 - Declaration of Connected Person Transactions

 

We remind taxpayers that where they conducted any transaction with a connected or affiliated company during the year of assessment 2019, it is mandatory that the Schedule 8 – Declaration of Connected Person Transactions be completed online and submitted with the income tax return by March 16, 2020.

Any person who fails to certify that the accounts and information, which are used to prepare the income tax return, include the particulars of all connected-person transactions, is liable on conviction in a Resident Magistrate’s Court to a maximum fine of J$2 million, or a maximum of 12 months imprisonment in default of payment of the monetary fine. The company would also be liable for any additional tax and interest arising from any assessment raised by TAJ, after applying transfer pricing rules to the company’s return.

In addition, all taxpayers that earn gross revenues of five hundred million dollars ($500,000,000) or more, upon request from TAJ, are required to provide transfer pricing documentation that verify that their connected-person transactions for a particular year of assessment are consistent with the arm's length principle.  This is required to be provided to TAJ within thirty (30) working days.

 

Penalty for late filing of income tax returns

 

A penalty of $5,000 per month or part thereof, up to a maximum of $1 million, will be imposed for late filing of income tax returns and declarations of estimated income tax payable.  This penalty will be imposed on the taxpayer automatically, if the due date for filing (March 16) is missed.

KPMG will make every effort to assist clients to prepare their income tax returns and declarations in time for the March 16 filing deadline, if we receive all of the necessary information no later than January 31, 2020.

In light of the penalty system, if it appears that your audited financial statements will not be finalized by January 31, 2020 to facilitate the preparation and submission of the return and/or declaration by March 16, 2020, please contact us.  In the absence of audited financial statements, we may use draft financial statements or management accounts (as per your instructions) as a basis for preparing a provisional income tax return.  Any necessary amendments, based on the subsequent availability of audited financial statements, would be made and a revised return submitted to the tax authorities, after consultation with you. 

Where KPMG has not received the necessary information by January 31, 2020, we cannot guarantee that the income tax returns and declarations will be prepared in time for the March 16, 2020 filing deadline.

 

Mandatory e-filing of all corporate income tax return

 

We wish to remind clients that it is mandatory for all corporate taxpayers to electronically file their income tax returns and declarations of estimated income tax payable.  This has been effective since January 2, 2019 and continue to be enforced by TAJ.

 

Other considerations

 

Dormant companies and registered charities to file income tax returns

The following persons are required to file income tax returns for each year, even if the person is not liable to pay income tax (e.g. exempt companies) or has no income from any source for that year (e.g. dormant companies):

  1. A body corporate, incorporated, registered or constituted under any enactment;
  2. A trust or other institution that is registered as a charitable organization under the Charities Act, 2014; and
  3. Any prescribed person that carries on or has carried on a trade, profession, vocation or business.  A Ministerial Order will provide details on the relevant prescribed persons.  Based on our checks, no such Ministerial Order has been issued.

Kindly note that dormant companies must file income tax returns or will be subject to penalties for late filing. 

This obligation in respect of dormant companies, with the attendant penalties for late filing, may be the impetus for stakeholders to make the decision to wind up and de-register these inactive companies within corporate groups.

To send your feedback on this bulletin, please email taxbulletins@kpmg.com.jm