Government Entities Begin Filing GCT on Purchases

All Government Ministries, Departments and Agencies (MDAs) are now required to file General Consumption Tax (GCT) on government purchases, effective June 1, 2014.

This change forms part of the government’s ongoing tax reform programme and is a critical aspect of the country’s deal with the International Monetary Fund (IMF).

Speaking at a JIS Think Tank held on Monday, June 2, at the agency’s head offices in Kingston, Technical Specialist at Tax Administration Jamaica (TAJ), Donna Newman explained that “prior to June 1, all the government agencies would have been getting their invoices and purchase orders zero rated for GCT purposes by the tax office, but that will no longer be in place and we have introduced the tax withholding system.”

She further informed that the tax withholding system will require suppliers to present an invoice from purchases made, and the taxes withheld and paid over by the respective tax withholding entity, to the Government of Jamaica.

A withholding certificate will be given to suppliers after the GCT is withheld and will be used to claim their input tax credit.

All MDAs have already been registered as tax withholding entities.

This reform only applies to goods that are taxable. “You have some goods that you can acquire based on the GCT Act, without paying GCT,” Ms. Newman explained.

She added that concerns raised recently by some agencies such as the Jamaica Urban Transit Company (JUTC), regarding the new GCT arrangement, are unique and will be dealt with on an individual basis.

Ms. Newman said this measure is expected to stem the revenue leakage in the system and result in greater compliance from suppliers to government entities.

TAJ will continue focus group sessions, consultations, and direct meetings with representatives from respective Government entities, to explain the process and ensure the successful implementation of this reform measure.

By Oroyo Eubanks