Micro, small and medium-sized enterprises (MSMEs) will soon begin to benefit from a special income tax credit of $375,000.
This follows passage of the Income Tax (Amendment) Act, 2020, by the Senate on Friday to facilitate the move. The Bill was approved by the House of Representatives on December 15.
Minister of Foreign Affairs and Foreign Trade, Senator Kamina Johnson Smith, who piloted the Bill in the Upper House, noted that the tax credit will be particularly beneficial for MSMEs grappling with the effects of the coronavirus (COVID-19) pandemic.
She said that it is among a range of revenue measures that were announced by the Government earlier this year.
“When the measures were first announced, the challenges to businesses and workers brought on by the COVID-19 pandemic could not have been envisaged. But it is our vision, our belief as a Government, that the measures are now needed more than ever because we do need our businesses to remain in operation and to be able to retain employees in so far as is possible,” she said.
Johnson Smith, who is Leader of Government Business in the Senate, pointed out that by providing the tax credit, the Government is seeking to ensure that sufficient assistance and stimulus is provided, while encouraging formalisation “in a way that will sustainably help MSMEs and their employees weather the storms of the pandemic.”
She noted that this assistance is crucial given that MSMEs are important drivers of job creation, economic growth and development in Jamaica.
“MSMEs make up more than 95 per cent of all classified tax payers and the Government is therefore determined to continue to recognise their importance and to encourage their growth. This is by creating a framework of measures and solutions that help MSMEs overcome the challenges that traditionally have hindered their growth and development,” she said.
Johnson Smith noted that over the last two years, the Government has implemented a suite of measures geared towards these goals, including abolishing the asset tax and the minimum business tax, and increasing the General Consumption Tax (GCT) threshold from $3 million to $10 million.
“As part of this suite of measures, the Bill will further stimulate investments, catalyse job creation, increase staff retention as well as ensure that we continue to create a productive society,” she pointed out.
The annual income tax credit will be available for both regulated and unregulated MSMEs that earn up to $500 million each year, and file taxes.