Companies get $4b tax write-off
SINCE 2018, the Government has written off approximately $4 billion in taxes owed by 86 companies, including one entity which had $1.5 billion in corporate income tax (CIT) arrears, a Sunday Gleaner probe has found.
The revelation comes as the Micro, Small and Medium-sized Enterprise (MSME) Alliance calls for write-offs to help its members cope with the fallout from the COVID-19 pandemic.
But such calls come in the context of widening revenue gap for the Andrew Holness administration and news that about 46 per cent of companies are failing to pay their fair share of CIT. The $4 billion is likely to be far higher when other tax types are factored in.
Some of the information came through an access to information request to Tax Administration Jamaica (TAJ), which stuck to its policy of not publishing the names of delinquent businesses.
In 2018, 54 companies benefited from the provision in the law which allows the commissioner of taxes to make recommendations for writeoffs to the finance minister.
There were 19 such approvals totalling $185 million in 2019, and for this year, 13 businesses have benefited so far.
COMPANIES IDENTIFIED
The companies can be identified based on the information published in the state’s newspaper, the Jamaica
Gazette, but checks so far have not yielded details on the company which received the $1.5 billion write-off.
The TAJ labelled the entity as ‘Company AB’. Another one, ‘Company S’, had $707 million wiped away.
Using gazetted information, The Sunday Gleaner was able to identify some of the entities captured in the TAJ’s response.
For example, $221 million in CIT for December 2008 to December 2009 was written off for the Colombian engineering firm Schrader Camargo Ingenieros Asociados SA, which the TAJ had as ‘Company I’.
The company’s total figure was $233 million when PAYE taxes and asset tax arrears were added.
Some of the other companies included Facey Commodity Company, Mack D’s Auto Sales and Services, Quality Academics, Vaz Preparatory School, Covenant Christian Academy & Children’s Centre, Pastry Passions, Crichton Brothers, Jamaica Villa Vacations, Hammond’s Pastry Place, Straight Edge Construction and Polka
Dots Limited.
Approximately $44 million in interests on CIT in December 2009 was written off for Facey, a 90-yearold food distribution company.
Mack D’s had its slate wiped of $344 million in PAYE, general consumption tax (GCT), minimum business tax and education tax that accumulated at different points between November 2011 and December 2018.
Its PAYE alone was $267 million; GCT at $34 million and education tax at $25 million. The bulk, like for many other institutions, was in interest and penalties.
Quality Academics, an educational institution, had its $88 million arrears in education tax and PAYE, built up between December 2007 and December 2016, written off.
In the recommendation to Finance Minister Dr Nigel Clarke, the commissioner general of taxes determined that the amounts owed by the companies was “uncollectible”.
Sunday Gleaner messages sent to Clarke on September 11 and 23 have gone unanswered.
The Ministry of Finance and the Public Service told The Sunday Gleaner that the top five reasons for the $4 billion in write-offs since 2018 were the inability of companies to pay; businesses closed without any assets; directors cannot be located, were terminally ill or have died; or companies bankrupt.
Debts older than 10 years and where the cost to collect is greater than the debt can be used as legal reasons to forgive a company in arrears.