GCT Act amended for re-registration of business persons

Business persons, who now fall below the new General Consumption Tax (GCT) threshold and are to be deregistered as taxpayers, will have the option to apply to the Commissioner General to be re-registered.

This is being facilitated through amendments to the GCT Act, which were approved during Friday’s (January 24) sitting of the Senate.

Leader of Government Business in the Upper House, Hon. Kamina Johnson Smith, who piloted the Bill, informed that the amendments “are intended to give effect to the policy ensuring the voluntary registration of persons who fall below the new threshold of GCT, but who opt to remain registered taxpayers”.

She informed that as part of the 2019/2020 fiscal year revenue measures, the Government increased the GCT threshold from $3 million to $10 million and the last time the threshold was increased was in fiscal year 2009/2010.

“The increase in the GCT threshold anticipates the deregistration of persons whose gross total supplies are less than the threshold of $10 million, and these persons would no longer be required to file a monthly GCT return, as they would not be considered registered taxpayers based on the GCT threshold status,” Senator Johnson Smith explained.

She noted that while this measure is expected to reduce the GCT base, it is also expected to generate efficiencies and administrative cost savings, not only to the businesses themselves but to tax administration based on the numbers and value of the transactions.

 “The government policy of increasing the threshold has the positive effect of aiding and stimulating the micro and small business sectors of the economy, and in that regard, cost savings should accrue to the sector, as companies operating at the lower end of the revenue threshold will not be obliged to undertake all that is entailed with registration and filing of GCT returns,” the Leader of Government Business said.

She noted that the measure has also been working together with the Government’s removal of the Minimum Business Tax to ease the burden on small businesses and to give them more space to grow.

The legislation seeks to amend Sections 23b, 26 and Section 27 of the principal Act. It inserts a new section 27A and consequential amendments are also made to the Income Tax Act and the GCT Regulations.

In terms of 23b, this section provides for the payment of tax, in respect of imported services.

For Section 26, the amendment provides for the application for registration by persons carrying on a taxable activity and that sub-section 1 is now replaced by new sub-sections 1 and 2 with sub-section 1 mandating persons who meet the annual $10-million threshold to apply to the Commissioner General to be registered as taxpayers.

“This is the heart of the Bill – the voluntary registration, which is also supplemented in sub-section 2 providing expressly for the voluntary registration of persons who do not meet the $10-million threshold. In that regard, they may apply to the Commissioner General to be registered as taxpayers,” Senator Johnson Smith noted.

Further, Sub-section 4 is amended to provide that an application for mandatory registration as a taxpayer must be done within 21 days after the attainment of the threshold and provides that the Commissioner General may use his or her discretion in extending the time as given under the sub-section, if satisfied that the circumstances allow for it.

“Section 27 provides for registration and the new Section 27 (1) A provides that on receiving an application for mandatory registration, and provided the threshold amounts are met – [that is] the annual and the average figures – the Commissioner General shall register the person as a registered taxpayer,” Senator Johnson Smith explained.

Additionally, the proposed new section seeks to exempt from liability in respect to any failure to register as a taxpayer during the period April 1, 2019 to the commencement date of the amended Act.

“So, if they were deregistered as a result of change of threshold as a part of the administrative process and did not register because their revenue threshold changed, they wouldn’t be liable for an offence under the Act,” the Senator said.