THE EDITOR, Sir:
I read the article 'Corporate tax cut under consideration' in the Financial Gleaner, January 25, 2008. If companies desire a decrease in the corporate tax rate, and the Government requires increased compliance, those companies should be rewarded each time they are compliant. Like other entities in certain sectors that get tax incentives by meeting certain requirements, such as hotels and mining, under the respective incentive acts, then shouldn't other companies who meet certain requirements be given an incentive? In this case, a corporate tax incentive - for being compliant.
Could this influence the corporate attitude to voluntary compliance? It all depends on companies desirous of obtaining a 25 per cent corporate tax over a 33.33 per cent rate by remaining or becoming compliant. The choice is theirs.
The administrative aspect of determining when companies are compliant can be analogous to the granting of a Tax Compliance Certificate (TCC). Therefore, if companies meet certain criteria (nothing onerous) such as filing and payment of estimated income taxes on time, once met, those companies would be eligible for a 25 per cent or even a lower corporate tax rate for that year of assessment only.
To illustrate, if in year of assessment 2007 Company X was complaint then a 25 per cent corporate tax rate would be applicable. If in the subsequent year of assessment 2008 Company X was not compliant then 33.33 per cent tax rate.
In summary, apply 25 per cent or lower tax rate to those companies that are compliant and maintain 33.33 per cent for those who are not.
I am, etc.,
VAUGHN WILSON
vwgwilson@yahoo.com
P.O. Box 819
Spanish Town