“Beenie Man wanted for tax evasion!” the news headlines screamed. The popular Jamaican entertainer, whose real name is Moses Davis was in big legal trouble recently after he failed to turn up in court to answer charges of tax evasion.

According to the reports, Beenie Man owes nearly J$30m in back taxes and over J$18m in penalties. As Resident Magistrate Owen Parkins issued the warrant for his arrest, he issued a warning: “No one is above the law, not even me.”

Only time will tell the outcome of Beenie Man’s tax woes, but his dramatic story highlights a very sensitive issue for consumers- the paying of taxes. In Jamaica, most employed persons are taxed automatically through the Pay As You Earn (P.A.Y.E.) system, where their employers are responsible for deducting and paying over their taxes to the authorities.

However, as more people become separated from their nine-to-five jobs through redundancies or the desire to be their own bosses, non-compliance in paying taxes becomes a big issue.

The author of the famous saying, “The only things certain are death and taxes,” probably never heard about Jamaica, where many self-employed people operate blissfully without a second thought about their obligations to the tax man.

Most tax evaders are not evil people or criminals who flout the law and create mayhem in society. They are everyday hardworking people – your hairdresser, your caterer, your taxi-man, maybe even your favourite newspaper columnist. Problem is – no one really wants to fork out their hard-earned money to pay taxes, especially if their business needs the extra capital to survive, and they are not convinced that their tax dollars serve their needs anyway.

It may have been easy for many to escape paying taxes because the Jamaican tax system is based on a self-assessment, where the onus is on you to voluntarily calculate, report and pay your tax liabilities. However, with the challenging economic times that our country is facing, the government will have to widen the tax net to capture more non-compliant persons. If you are self-employed and not paying your taxes, it might be smart to learn what your requirements are and start complying before you are forced to.

This week we will look at some of the tax registration requirements of entrepreneurs. Although there still is a lot to be done to make it simpler to pay taxes, the good news is that the Tax Administration has made it easier to find out what your responsibilities and rights are. Their website www.jamaicatax.gov.jm has a handy guide called Your Tax Kit, which outlines the process of paying taxes and provides some of the necessary documents in a downloadable format.

Let’s look at some of the initial steps that will keep you on the right side of the law:

1.   Register your business

All business people who use a trade name other than their own given name are now required to register that name with the Companies of Jamaica. So if Mr. Brown and his partner Mr. Bell have been running their garage informally under the name “B&B’s Auto Repairs” they can no longer use that name on advertisements, signs, business cards or letterheads, unless it is properly registered. Individuals and partnerships will receive a Certificate of Registration of Business Name while companies get a Certificate of Incorporation for Companies. Charitable and other professional organizations also need to be registered.

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2.   Register for TRN

A Tax Registration Number (TRN) is needed to conduct business with the Tax Administration. TRN registration is done at any tax collectorate or at the Tax Registration Centre at the Kingston Mall. Individuals will have their personal TRN upgraded to that of a sole proprietor and some extra digits will be added to it to indicate that you are “Trading as.” Companies will receive a new unique TRN.

3.   Register for GCT

According to the tax laws, any person whose total annual supplies of goods or services are J$1m or more, and who is engaged in a taxable activity must be registered as a registered taxpayer of the General Consumption Tax (GCT). If you fall under this requirement, you can register at any collectorate.

4.   Register with NHT, NIS and HEART

As a self employed person, you are still required to voluntarily make these contributions. If you have employees or if you have a company, you will need to register too.

5.   Apply for approved / exempt status

If you are an approved charity or educational institution, you can apply in writing to the Taxpayer Audit & Assessment Department (TAAD) to receive exemption from paying taxes.

After you are properly registered into the tax system, the next step is to learn about the different business taxes that you may be required to pay, such as income tax, P.A.Y.E (on behalf of employees), education tax, GCT and asset tax for companies. The reality is that you will probably need help in calculating your liabilities and keeping track of the times they are due. Even if you’re a sole proprietor with a work force of just one, if might be wise to hire an accountant, even part-time, to help you to be compliant.

Next week we will find out how you can actually benefit financially from paying your taxes.

Copyright © 2007 Cherryl Hanson Simpson. No reproduction without written consent.

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