|Jamaican General Consumption Tax Explained (G.C.T).|
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Jamaican Articles - The Jamaican GCT - Value Added Tax
Learn about the Jamaican Value Added Tax System.
The Jamaican General Consumption Tax (GCT) which commenced on October 22, 1991 has simplified and modernized the Jamaican indirect tax system. The Jamaican GCT has replaced the following eight (8) taxes, Jamaican Excise Duty, Jamaican CARICOM Duty, Jamaican Retail Sales Tax, Telephone Service Tax, Jamaican Entertainment Duty, Jamaican Hotel Accommodation Tax, Jamaican Consumption Duty Additional Jamaican Stamp Duty levied on the importation of goods except for in-bond shops
The Jamaican GCT is a value added tax which is applied on the value added to Jamaican goods and services at each stage in the production and distribution chain. It is a Jamaican tax on consumption and is included in the final price the consumer pays for Jamaican goods and services. The Jamaican General Consumption Tax Act requires most businesses in Jamaica to Register with the Jamaican Taxpayer Audit and Assessment Department or TAAD. These Jamaican companies are required to charge and collect tax at 15% on all the standard-rated goods and services they supply. They must calculate for each taxable period net tax due/creditable and file Jamaican GCT returns. Remit the net Jamaican GCT collected to the Jamaican Inland Revenue Department within 30 days or, in some cases 15 days following the end of each taxable period, or in other cases, at the direction of the Commissioner.
The Jamaican GCT is a tax based on consumption and is applied to each transaction through the production and marketing process. Jamaican businesses which carry on an activity that is not exempt from GCT are required to file an application for registration. Those persons whose total annual sales of Jamaican goods and services are less than JMD$144,000 for a twelve-month period will be registered as Registered Persons. As such the business will be exempt. That is, it will not collect GCT but will pay GCT on purchases of Jamaican goods and services and not be eligible for credit.
Jamaican businesses whose total annual sales of Jamaican goods and services are JMD$144,000 and over for a twelve-month period are required to register as Registered Taxpayers, and will collect and remit Jamaican GCT. Registered Taxpayers who provide taxable goods or services will pay GCT on their purchases and charge Jamaican GCT on their sales. If the GCT charged is more than the GCT paid, the difference is to be paid to the Inland Revenue Department. If it is less, the Registered Taxpayer may claim a credit/refund.
Registered Taxpayers are able to claim an Input Tax Credit for the GCT paid on business purchases (related to providing taxable Jamaican goods and services). The Input Tax Credit can be claimed for the materials and services purchased for further manufacture or for resale (including imports), purchases of capital property and any Jamaican goods or services, such as office supplies, which are requirements to operate the business subject to tax.
In completing the Jamaican GCT return, the taxpayer will be able to deduct his Jamaican Input Tax Credit from GCT charged on sales. In this way, the Input Tax Credit removes the GCT from the GCT from the goods or services until they are finally purchased by the consumer. Under the Jamaican GCT act most Jamaican goods and services are taxed at fifteen percent (15%) except for motor vehicles. Some, however, are taxed at zero percent (zero‑rated) and some are GCT‑exempt. This means that Registered Jamaican taxpayers charge GCT at 15% on those items which attract the tax. Where goods and services are zero‑rated, Registered Taxpayers do not charge GCT on sales of these goods/services. They are, however, able to claim an Input Tax Credit for any GCT paid on business purchases which are made in order to manufacture or provide these zero‑rated Jamaican goods/services. Where goods and services are GCT-exempt, no GCT is charged on these items. However, unlike zero‑rated Jamaican goods, Registered Taxpayers are not able to claim an Input Tax Credit on the purchases used to provide exempt Jamaican goods and services. Exempt supplies are listed in the Third Schedule of the Jamaican General Consumption Tax Act.
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