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How Much Is GCT In Jamaica?

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hurricane_matthew_supermarket_lines_2016How Much Is GCT In Jamaica?

By Venesha Johnson | Associate Writer

They say there are two things we can all be certain of in life… death and taxes. While if you are cunning enough and brave enough you may find ways to evade certain taxes, one tax that we all must pay, on a daily basis is sales tax and in Jamaica, we refer to that as the General Consumption Tax or GCT for short.

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The General Consumption Tax (GCT) is a crucial element of our country's fiscal framework and functions as an additional tax on the importation and domestic supply of goods and services. It was not always what it is today, since its enactment in October 1991, GCT has experienced a number of modifications while continuing to be an essential source of income for the island.

How much is GCT in Jamaica?

GCT applies to most goods and services, with certain exemptions and zero-rated categories. So whether you are going to the supermarket or to the hardware store, or even to grab some KFC, if you check your receipt you will certainly see the total amount you paid in GCT, and on some receipts you may even see a detailed breakdown of the GCT on each item you purchased. Currently, GCT tax is set at a standard rate of 15%, however, this tax rate can vary for specific goods and services. For instance, telecommunications services incur a higher rate of 25%, while the tourism sector benefits from a reduced rate of approximately 10% for approved activities.

What items are exempt from GCT in Jamaica?

Did you know that we don’t pay GCT on every single item? Let’s use going to the supermarket as an example. Did you know we do not pay GCT on even some of our favourite items like Bulla, crackers, sardines and even cock soups (as long as they are being sold in the typical aluminium sachets) Essentials like rice, flour, sugar, cornmeal, bread and infant formula are also tax-free. There are many other items that are tax-free as well:

  • Basic food items: Such as raw foodstuffs like fruits, vegetables, and meats.
  • Educational services: Including tuition fees and related educational materials.
  • Healthcare services: Medical services provided by healthcare professionals.
  • Financial services: Such as banking and insurance service

Special Consumption Tax (SCT)

Alongside GCT, we also have the Special Consumption Tax (SCT) that is applied to specific items. SCT applies to goods such as alcoholic beverages, tobacco products, and certain petroleum products. While most items attract only GCT, those subjected to SCT incur an additional tax layer. They say this dual taxation aims to regulate the consumption of specific goods, particularly those with health and environmental impacts while contributing to government revenues.

Businesses and GCT

GCT is applicable to medium-sized and larger businesses in Jamaica, as it is mandatory for registration whenever an organization's annual revenue is above JMD 10 million. International trade is further integrated with taxation through the 5% advance GCT imposed on commercial imports by registered taxpayers. Group accounting allows firms to simplify tax compliance for related organizations by consolidating their GCT requirements under the Tax Administration Jamaica (TAJ). This system encourages organizational entities to follow regulations and be efficient.

Most Recent Adjustments

Prior to 1 April 2020 when the GCT rate was reduced to its current 15%, the GCT standard rate was amended in June 2012, with a downward adjustment from 17.5% to 16.5%. Its goal is to strike a balance between economic competitiveness and revenue objectives. These modifications, as stated in Jamaica's fiscal policies, take into account wider factors, such as global trade agreements and fiscal sustainability.

Upcoming Adjustments

Local business owners can look forward to the removal of GCT on imported raw foodstuffs. This policy change, effective in the first quarter of fiscal year 2024/2025, addresses the imbalance where imported raw foods were previously taxed while local raw foods were exempt. By eliminating GCT on imported raw foodstuffs, the government intends to create a level playing field for both local and imported produce. This move aims to offer consumers more affordable options and mitigate the risk of Jamaica being blacklisted by the World Trade Organization (WTO) for non-compliance with international trade agreements. However, this policy shift is projected to result in a loss of JMD 2.4 billion in tax revenue, highlighting the government's challenge in balancing international obligations with fiscal needs.

While taxes can be somewhat of an inconvenience to taxpayers, we must also bear in mind that the general consumption tax is essentially a multipurpose fiscal tool that strikes a balance between the need to generate income, sectoral support, and international commitments. As a result of continuous efforts to align economic policy with international norms, it has evolved to ensure sustainable growth and fair market dynamics for both Jamaican consumers and enterprises.

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References & Sources For How Much Is GCT In Jamaica?

  1. Jamaica - Corporate - Other taxes. (n.d.). https://taxsummaries.pwc.com/jamaica/corporate/other-taxes#:~:text=GCT%20is%20a%20value%2Dadded,is%20currently%20JMD%2010%20million
  2. BDO Corporate Tax News Issue 57 - Jamaica. (n.d.). https://www.bdo.global/en-gb/microsites/tax-newsletters/corporate-tax-news/issue-57-january-2021/jamaica-new-revenue-measures

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