Government promises to strengthen Inland Revenue Department

Monday, April 26, 2010 – Prime Minister Honourable Stephenson King, has announced several new revenue measures that will come into full implementation, over the 2010/ 2011 financial year.

Withholding tax on interest paid to non-residents is one of the new revenue measures announced. The Prime Minister indicated to the House of Assembly that he had previously announced the removal of the exemption pertaining to the payment of withholding tax on interest under the third schedule of the Income Tax Act.

The Prime Minister said however, as the recession deepened in 2009, he had taken the decision to put the implementation of this measure on hold.

“I have now decided to proceed with the implementation of the measure. Accordingly, interest payable to non-residents will no longer be tax exempt under the 3rd schedule of the Income Tax Act, and will be subject to withholding tax at the rate of 15 percent. It must be noted that resident corporations pay tax on interest income at the corporate tax rate of 30 percent, while individuals pay taxes on qualifying interest income at their individual tax rates which range from 10 percent to 30 percent.”

Another revenue measure announced by Prime Minister King will impact on property tax. The Prime Minister, who is also minister for finance, says the property tax regime will be changed to an open market valuation system for assessing residential properties, as opposed to the existing system based on annual rental values, which is less transparent. He says commercial properties are already being assessed via this new system.

Property taxes, according to the Prime Minister, have been saddled with problems of low compliance and insufficient enforcement, and as a result the Inland Revenue Department will be strengthened and will be required to improve on its enforcement procedures.

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