Minimum Business Tax
The Minister of Finance announced an abolition of the Minimum Business Tax during his opening budget presentation, March 2019, at the Budget Debates. This has since been revised to indicate the removal of the tax for entities registered under the Business Names Act and Dormant Companies. The removal of the tax formed part of a number of measures aimed at making it easier for new startups, small and medium sized businesses and other entities to grow their business and spur economic growth.
Minimum Business Tax was introduced in the 2014. The tax is sixty thousand Jamaica dollars and is payable in two installments of thirty thousand Jamaica dollars June 15 and September 15 each year.
Individuals
Previously, the tax was to be paid by Individuals who carry on or exercise a trade, profession, vocation or business that has gross revenue, excluding emoluments earned as an employee at other places of employment, of not less than five million Jamaica dollars per annum, in the calendar year immediately preceding the assessment period in which the Minimum Business Tax (MBT) is payable.
An individual who carries on a trade, profession, vocation or business would be required to pay Minimum Business Tax in 2017 if his or her gross revenue, excluding emoluments earned as an employee at other places of employment, was equal to or greater than five million Jamaica dollars for the year of assessment January 1 to December 31, 2016.
An individual who carries on a trade, profession, vocation or business would not be required to pay Minimum Business Tax in 2017 if his or her gross revenue, excluding emoluments earned as an employee at other places of employment, was less than five million Jamaica dollars for the year of assessment January 1 to December 31, 2016.
The Minister of Finance announced an abolition of the Minimum Business Tax during his opening budget presentation, March 2019, at the Budget Debates. This has since been revised to indicate the removal of the tax for Individuals Who Trade and entities registered under the Business Names Act. The removal of the tax formed part of a number of measures aimed at making it easier for new startups, Small and Medium sized businesses and other entities to grow their business and spur economic growth.
Partnerships
In the case of a partnership, a partner who has gross revenue of not less than five million Jamaica dollars, was previously required to pay Minimum Business Tax. Gross revenue of the partner was determined by:
1. The established share of profit ratio applied to the gross revenue of the partnership; and
2. Any other revenue source of that partner (excluding emoluments earned as an employee at other places of employment).
Companies and Body Corporates registered under certain enactments
A company or other body corporate, incorporated or registered under any of the following enactments:
1. Companies Act (including companies incorporated outside of Jamaica and registered under part 10 of that Act) except those incorporated for not more than 24 months;
2. Building Societies Act;
3. Co-operative Societies Act;
4. Friendly Societies Act;
5. Industrial and Provident Societies Act;
6. Insurance Act
Other than an entity that is a charitable organization registered under the Charities Act or an entity that is fully funded by a multilateral agency. International organisations subject to the Diplomatic Incentives and Privileges Act are exempt from paying Minimum Business Tax.
The Minimum Business Tax is to be paid by all companies listed under the aforementioned Acts.
The Minister of Finance announced an abolition of the Minimum Business Tax during his opening budget presentation, March 2019, at the Budget Debates. This has since been revised to indicate the removal of the tax for Dormant Companies.
Companies which are exempt from the payment of Income Tax or operating under an income tax incentive regime are also liable to pay Minimum Business Tax. Currently the tax is set at zero rate.
The Minimum Business Tax does not replace the obligation for paying estimated income tax.
All Taxpayers
The Minimum Business Tax paid by a specified taxpayer in any assessment period is to be credited towards income tax payable by the specified taxpayer for that year of assessment (see Income Tax Annual Returns and Preparation of Financial Statements and Tax Returns )and is to discharge a corresponding amount of the liability of the specified taxpayer to income tax for that year of assessment (without reducing or otherwise affecting the remainder of such liability).
Contact AMCS Jamaica Limited.