Withholding tax on Specified Services to take effect June 1

Tax Administration Jamaica (TAJ) has announced that the withholding tax on Specified Services will be implemented on June 1, one month later than it was originally slated to have started.

   
TAJ says the new measure will be introduced on a phased basis. It will apply to Government entities, financial institutions regulated by the Financial Service Commission and the Bank of Jamaica, as well as tourism operators, utility and cable companies, grossing more than J$500 million.

   
They will be required to withhold three per cent from payments made on specified services, on invoices of  more than $50,000.

These will include accounting services, "and certain entertainment services that are provided to these large entities; those entities will now be required to deduct three per cent from those payments," Meris Haughton, Director of  Communication at the TAJ, explained.

She added, however, that these service providers will be able, at a later date, will be able to claim the equivalent amount of credit against their income tax liability, "so it's not something that they will lose; once they pay their quarterly (income tax) they will be able to claim these amounts."

They will be required to submit their withholding tax certificate, as proof that of the three per cent deduction, she added.

                                                             

According to Miss Haughton, the withholding tax will help to widen the country's net, citing the Pay As You Earn (PAYE) system and the General Consumption Tax (GCT) on government purchases as examples of withholding tax mechanisms, still in use in Jamaica.