Recovery still an option if companies’ standing change

SOME OF the write-offs are part of the ongoing process of the TAJ to clear $230 billion in uncollectible taxes in which private-sector companies may benefit if their arrears were before December 2010.

Tax write-offs in Jamaica are taking place in a more predictable and structured environment as a result of the legislation approved by Parliament in 2013.

The new regime sharply contrasted with the far more discretionary-based system that existed before in which tax forgiveness was heavily used as a political tool to extract leverage, a senior tax expert in the Office of the Prime Minister told The Sunday Gleaner.

“The big man could just call the minister and his bill would be settled,” the official said.

The new regime was also driven by high rates of interests and penalties and difficulties collecting even after assessments, which created a drag on the authorities who needed a way to boost compliance and support business growth.

The TAJ, too, was buckling under the weight of old debts, which it needed to clear from its books to improve its revenue-collection reporting.

Additional information obtained in July shows that 5,583 out of the 12,203 of the CIT company taxpayers on TAJ’s records are delinquents, with the Government taking various actions

against some,

A write-off is different from a waiver, in that the commissioner general has the right, within 20 years of the writeoff, to demand payment of taxes written off ... .

including lawsuits.

The 2013 amendments to the tax collection law came as the country was ushering in a period of tough fiscal reforms grounded in a programme with the International Monetary Fund.

The changes gave the finance minister the legal authority to write off tax arrears and penalties determined to be uncollectible by the tax commissioner.

The operationalisation of that has seen the creation of a committee which assesses the cases before any recommendation is made in a bow to transparency.

That committee includes representatives from the TAJ – a tax specialist, lawyer and a deputy tax commissioner – and the finance ministry, whose agents are a deputy financial secretary, and directors for tax relief and policy review.

The taxpayer’s history, profitability, the reasons put forward for the write-off request, interviews with the company or individual and even site visits are considered in making the final recommendation.

Further changes to the Tax Collection Act regulations came in 2018 to make it easier to qualify for debt forgiveness.

That was an attempt to correct an “inequitable” feature in the regime, where it was felt delinquent taxpayers were being rewarded while entities that invoked their legal right to challenge a decision of the commissioner of taxes were being punished.

Companies that do benefit from write-offs do not automatically escape the State. Since regulations also allow for the periodic review of companies’ tax records, the authorities can still try to recover the amounts cleared.

“A write-off is different from a waiver, in that the commissioner general has the right, within 20 years of the write-off, to demand payment of taxes written off, once it is determined that the taxpayer is now in a position to make such payments,” the finance ministry official told The Sunday Gleaner.