The government will be undertaking several initiatives to increase tax compliance in the next fiscal year.
Significant improvement in tax compliance is being projected by the government and is expected to drive the 140 billion dollars or 54 percent increase in recurrent tax revenues.
In its 2015-2016 Fiscal Policy Paper the government sets out some of the initiatives to be undertaken by Tax Administration Jamaica, TAJ, to improve tax compliance.
Speaking last Thursday, Finance Minister, Dr. Peter Phillips says the government will be undertaking targeted measures to secure improved compliance.
Among those measures will be the introduction of new transfer pricing rules to ensure that prices charged for inter-company transactions are similar to those charged between two different companies.
This will ensure that the taxes charged on these transactions are more accurate.
In addition Tax Administration Jamaica, TAJ, says it will be moving to significantly utilize third party information matching to improve registration compliance – ensuring businesses that should be paying taxes are registered with the TAJ.
With the introduction of the new Risk Assessment Information System, RAiS, the TAJ will now be able to assign compliance managers to specific tax payers who will track their filing and institute relevant penalties of prosecution action.
The TAJ will also be seeking to boost payment compliance.
In this regard, the tax authorities say they intend to extend automated withholding at source arrangements with third parties.
It will also be working with banks to incorporate e-payment by taxpayers through their own bank’s existing bill payment systems.
And the government also intends to take more aggressive action through recent strengthening of legislation which provide for stronger penalties and collection of taxes through liens and garnishee action.
The government says it also intends to take strong action against those tax payers who close down one business with out paying tax debts, only to re-open under a different name with the same management and ownership.
The TAJ says it also plans to boost its audit coverage by recruiting additional tax auditors.
The achievement of the government’s ambitious revenue target rests on the success or failure of these measures in the upcoming fiscal year.
Revenue from the major tax categories of Customs, Income Tax, Stamp duties, as well as GCT, and SCT account for almost 88 percent of the 402 billion dollars of recurrent tax revenue projected for 2015-2016.
Altogether these five tax categories are expected to see a 56 percent increase to 352 billion dollars.
But with tax collections for the current 2014-2015 fiscal year running 10 billion dollars behind budget, there are concerns that the new revenue estimates are overly optimistic.