Corporation Taxes

GENERAL

On the formation of a new company a copy of the Articles of Incorporation MUST be presented to the Registrar of Companies and a Certificate of Incorporation will be issued.

The Company should then register with the Tax Roll Unit of the Inland Revenue Department by submitting a copy of the aforementioned documents.  The Non-Individual Enterprise Registration Form must also be completed.  This will allow for the inclusion of the company on the new Standardised Integrated Government Tax Adminstration System (SIGTAS).  This is a new computerised system which has been implemented  by the Department.

The company’s Tax Account Number must be used on all correspondence to the Inland Revenue Department including remittances for P.A.Y.E., Instalments and any other tax type.

TAXATION

The residence of a company for tax purposes is determined by the country in which it is managed and controlled.  Corporation Tax is chargeable on all the profits of a resident company.  Profits that accrue directly or  indirectly to a non-resident company carrying on a business through a permanent establishment are subject to corporation tax at 33 1/3%.   Where income accrues to a non-resident company from a source other than from the carrying on of business through a permanent establishment the gross amount of such income is liable to withholding tax at 25%.

All companies are required to pay to the Department on or before March 25, June 25 and September 25 respectively, in each income year, an amount equal to one third (1/3) of the estimated tax for the year.  The estimated tax is calculated as 33 1/3% of the chargeable income for the preceding income year. The remainder of tax as estimated by the company must be paid by March 31 of the following year.  In the case of a company whose financial year does not commence in the month of January this outstanding amount must be paid within three months of the end of its financial year.

Any balance of tax which remains unpaid will result in the imposition of a late-payment penalty of ten percent (10%).  Interest of 12.5% per annum will also accrue on the outstanding balance.

P.A.Y.E.

Employers are charged with the responsibility of deducting tax from the remuneration of their employees in accordance with the prescribed Tax Deduction Tables.  Tax Deduction Tables will be issued to the istration of the company.

Under the P.A.Y.E. system the employer Tables to deduct taxes, if any, at each pay period from the emoluments of their employees.  These amounts are to be paid to the Inland Revenue Department by the 15th day of the following month in which the taxes were deducted.  The prescribed P.A.Y.E. Monthly Remittance Form should be used when making those payments.

The employer must retain records of emoluments paid and taxes deducted.  These must be kept and made available for examination by officers of the Department as and when required for any period not exceeding six years.

With respect to each calendar year the employer must submit to the Inland Revenue Department no later than January 31 of the following year, a P.A.Y.E. Annual Remittance Form and Certificate of Remuneration (TD5).

The original and duplicate copies of the TD5 Certificate should be issued to the employee within one month of the end of the calendar year.

TAX RATE

Companies -  33 1/3%

WITHHOLDING TAX

Payments made to non-residents are subject to tax at a rate of twenty-five percent (25%).

PAYMENTS TO CONTRACTORS

Payments made either directly or indirectly through a financial institution to a contractor, for the supply of labour and/or the hiring of equipment are subject to tax at the rate of ten percent (10%).

ALLOWABLE DEDUCTIONS

The expenses allowed as deductions when computing income on which an assessment will be made must be wholly and exclusively incurred in the production of the income.  There are, however, restrictions to certain deductions e.g. management charges and certain payments by controlled companies to shareholders.

SUBMISSION OF TAX RETURN

The Company Tax Return must be submitted to the Inland Revenue Department within three months after the end of the income year.  All companies registered with the Department will receive a Company Tax Return (TD FORM IT-2) via the mail.

However, companies filing tax returns for the FIRST TIME are advised to collect a Return Form at any one of the Department’s offices.

When submitting a Tax Return please ensure that all the relevant schedules are completed and the declaration is duly signed.   This is essential for the easy processing of the Return.

PENALTIES

A handout listing the Penalties for offences against the Income Tax Laws can be obtained from the Department’s offices.

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