Tax Administration Jamaica (TAJ) wishes to advise that all Large Tourism Operators will be required to begin withholding the 3% Withholding Tax on Specified Services (WTSS) beginning November 1, 2015. This means that Tourism Operators, with a turnover of J$500M or more, must now withhold 3% of the total amount paid for specified services with invoices of $50,000
However, providers of specified services which are compliant with filing and paying their income tax may access the benefits of an Exemption Certificate (EC). This will allow them to collect the full payment from their clients without the 3% WTSS being deducted. To qualify for the EC, the specified service providers must have filed and paid their 2014 income tax in full or have a payment arrangement in place.
Businesses operating in any of the following specified services may apply for an Exemption Certificate at any Tax Office island wide:
- Consultancy - professional service by persons who are not acting in the capacity of an employee
- Engineering (e.g. Architectural, electrical, mechanical and structural)
- Information technology
- Repairs and maintenance – e.g. to equipment and motor vehicles
- The rental or leasing of motor vehicles or equipment
- Transportation, haulage or tours
The Exemption Certificate may then be presented to the authorized Withholding Tax Agent (WTA) to prevent the 3% income tax being withheld at source. For specified services without an exemption certificate, the WTA will present them with a Withholding Tax Certificate, which they’ll be able to use to claim as a credit when they file their income tax return.
The tax authority has held stakeholder sessions with several stakeholder groups from both the public and private sectors and will continue to roll these sessions out across the island to engage business entities in the various sectors of commerce.
The Withholding Tax on Specified Services, which was implemented on September 1, 2015, requires Government Ministries, Departments and Agencies, as well as entities regulated by the Bank of Jamaica and the Financial Services Commission, utility companies, tourism 3
operators and cable operators with yearly gross revenue, from all sources, of more than Five Hundred Million Dollars ($500,000,000) to withhold the tax. However the implementation of the WTSS was delayed for tourism operators following discussions with the tax authority and
the Ministry of Finance and Planning.
WTSS is a tax compliance mechanism designed to broaden the tax base, thereby increasing revenue collection and improving compliance. WTSS targets persons liable pay to Income Tax but are non-compliant and/or may not be in the tax database.