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Emerging Tax Trends

Nayoka Williams- 19010329

Stacie-Ann Patterson- 19010758

Jesreene Lee-Bowra- 1813545

Devonte Davis- 1723080

Bachelor in Business Administration

Portmore Community College

Mr. Omar Mcleish

March 13, 2023

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Table of Contents

Introduction ................................................................................................................................3

Emerging Tax Trends in Jamaica ................................................................................................4

Emerging tax trends worldwide ...................................................................................................5

Conclusion ..................................................................................................................................8

Reference ....................................................................................................................................9
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Introduction

“Today, it takes more brains and effort to make out the income-tax form than it does to make the

income” (Alfred E. Neuman). Taxation plays a major role in a country’s economy and is

imposed as a financial obligation on individuals. Imposing taxes on businesses and individuals

can be difficult and may result in crimes such as tax evasion. People are often left with less

disposable income and less money to invest or save. However, if the taxation system is

continuously monitored and improved it can be very beneficial to society. Taxation is used to

fund public infrastructure and services, fund salaries and pensions of government employees,

fund education, pay the principal and interest on government debts, and is also used for social

development and welfare programs.

Taxation in Jamaica often includes National Insurance Scheme (NIS), National Housing Trust

(NHT), Education tax, Income tax, Human Employment & Resource Training (HEART), Pay as

You Earn (PAYE), etc. These are all types of deductions and contributions that are usually taken

from an individual’s income that provide funds for economic, social, and political ventures. Tax

Administration Jamaica (TAJ) is responsible for collecting revenue in Jamaica. The agency now

offers e-services that allow individuals and businesses to pay their taxes and accomplish other

pursuits with more efficiency and convenience. In recent years there has been a spread of

taxation in the digital economy, which results in businesses needing to pay the digital tax or

needing to get registered in countries where there was no prior obligation and report details about

their transactions (Constantin, 2022). Taxation is a significant aspect of society, as it assists in

providing basic necessities and helps individuals who are at a disadvantage.

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Emerging Tax Trends in Jamaica

Digital taxation: With the rise of e-commerce and the digital economy, many countries

including Jamaica are considering implementing digital taxes on companies that conduct

business within their borders but do not have a physical presence. This could include taxes on

online marketplaces, social media advertising, and digital services.

Tax Incentives for Renewable Energy: Jamaica has been making efforts to shift towards

renewable energy sources, and tax incentives for businesses that invest in renewable energy

technologies may become more common.

Increased focus on Compliance and Enforcement: As Jamaica seeks to increase revenue

collection and reduce tax evasion, there may be a greater emphasis on tax compliance and

enforcement. This could include increased penalties for non-compliance and greater use of

technology to monitor and track tax payments.

Simplification of the Tax System: Jamaica has been making efforts to simplify its tax

system in recent years, with the introduction of a single-income tax rate and the elimination

of some tax exemptions and deductions. This trend may continue, with further efforts to

streamline the tax system and make it easier for businesses and individuals to comply with

their tax obligations.

COVID-19-related Tax Measures: In response to the COVID-19 pandemic, Jamaica has

implemented a number of tax measures to provide relief to businesses and individuals. These
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include a waiver of customs duties and GCT on medical supplies and equipment, as well as

tax breaks for businesses that retain employees. As the pandemic continues to affect the

economy, further tax measures may be introduced to support recovery efforts.

Individuals are generally liable to income tax at the rate of 25% on their chargeable income (not

exceeding JMD 6 million per annum) less an annual tax-free threshold (where

applicable). Chargeable income derived in excess of JMD 6 million per annum is subject to

income tax at a rate of 30%. An annual tax-free threshold of JMD 1.5 million is available to

Jamaican tax-resident individuals.

Emerging tax trends worldwide

Taxation is an important feature of many countries, it is implemented worldwide and is used by

governments to fund state projects such as education, hospitals, road works, etc. The digitization

of tax reporting is on the rise; it requires businesses to make available much more detailed

information to the tax authorities, and in a new format. Additional personnel and new technology

will be necessary to get this done. This will eventually result in tax authorities having more

insights into business procedures. Tax rules and regulations change frequently and one major

example is Europe’s VAT system (TMF Group, 2019). According to Investopedia, a value-added

tax (VAT) is a consumption tax on goods and services that is levied at each stage of the supply

chain, from the point of production to the point of sale. European Union rules state that VAT

should be paid either in the country of origin or in the country of destination of the goods and

services. There are separate rules that govern individuals and businesses in this regard.
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Electronic tax filing systems allow taxpayers to submit their tax returns electronically. This can

be beneficial to both the taxpayer and the government. Taxpayers benefit from a simpler and

more convenient system, while governments benefit from a reduced administrative burden that

can often result from the direct provision of taxpayer information in the regular electronic form.

(OECD iLibrary, 2017). There are three tax structures that are often implemented progressive,

regressive, and proportional taxation. Regressive taxation has a greater impact on low-income

individuals, proportional taxation also known as flat tax affects each individual equally, and

progressive taxation has a greater impact on wealthier individuals. Progressive taxation is often

used to assist destitute individuals by redistributing wealth in the economy.

Digital Taxation: With the increasing trend of e-commerce and digital transactions, many

countries are introducing new taxes or updating their existing tax laws to account for digital

transactions. This includes the introduction of digital service taxes, which target revenues earned

by multinational digital companies. (Constantin, 2019)

Environmental Taxation: Many countries are implementing environmental taxes to discourage

activities that contribute to environmental degradation or climate change. This includes taxes on

carbon emissions, plastic bags, and other environmentally harmful products or activities.

(Deloitte Articles, 2021)

Transparency and Information Exchange: There is a growing trend towards greater

transparency and information exchange between tax authorities worldwide. This includes
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initiatives such as the OECD’s Automatic Exchange of Information (AEOI) program, which

allows for the automatic exchange of financial information between countries. (Constantin,

2019)

Tax Incentives for Investment: Many countries are introducing tax incentives to attract foreign

investment and stimulate economic growth. These incentives may include tax holidays, reduced

tax rates, or exemptions for certain types of investments. (Deloitte Articles, 2021)

Base Erosion and Profit Shifting (BEPS): This is a global initiative aimed at preventing

multinational companies from shifting their profits to low-tax jurisdictions. Many countries are

introducing new rules and regulations to comply with BEPS recommendations. (Constantin,

2019)

Digitalization of Tax Administration: Tax authorities are increasingly adopting digital

technologies to improve tax collection and administration. This includes the use of online tax

portals, e-filing systems, and data analytics tools to detect tax fraud and evasion. (Deloitte

Articles, 2021)

Taxation of the Digital Workforce: With the rise of remote work and the gig economy, many

countries are considering new tax rules to address the taxation of digital workers. This includes

proposals for digital or virtual permanent establishments, which would allow countries to tax the

income of workers who are not physically present in the country but are generating income from

digital activities within the country. (Deloitte Articles, 2021)

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Conclusion

In Jamaica, as well as worldwide, there are several emerging trends in taxation that are shaping

the tax landscape. One of the most significant trends is digital taxation, as more and more

transactions are conducted online. Jamaica has recently introduced a new tax on online

purchases, while globally, countries are introducing digital service taxes to target multinational

digital companies. Another trend is environmental taxation, as countries seek to discourage

activities that contribute to climate change and environmental degradation. In Jamaica, there

have been proposals to introduce a carbon tax, while globally, countries are implementing taxes

on carbon emissions, plastic bags, and other environmentally harmful products.

Additionally, as countries work to prevent tax evasion and ensure that individuals and companies

pay their fair share of taxes. Jamaica has made progress in this area by implementing the

Common Reporting Standard, which allows for the automatic exchange of financial information

between countries. Globally, there are initiatives such as the OECD’s Automatic Exchange of

Information program, which is aimed at increasing transparency and information exchange

between tax authorities. Overall, these emerging trends in taxation highlight the need for

governments to adapt their tax systems to keep pace with changing economic and social trends.

While there are challenges and debates surrounding taxation, it remains a critical tool for

promoting social welfare, economic stability, and sustainable development.

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Reference

1. Constantin, E. (2019). 4 global tax trends and how they impact your operations.

https://www.tmf-group.com/en/news-insights/articles/2019/april/global-tax-trend-and-

impact-your-operations/

2. Constantin, E. (2022). Tax trends: from rates to reporting - what to expect in 2022:

https://www.tmf-group.com/en/news-insights/articles/2022/march/tax-trends-2022/

3. Constantin, E. (2019). 4 global tax trends and how they impact your operations: Global Reach

Local Knowledge:

https://www.tmf-group.com/en/news-insights/articles/2019/april/global-tax-trend-and-

impact-your-

operations/#:~:text=4%20global%20tax%20trends%20and%20how%20they%20impact,..

.%204%204.%20Growth%20in%20business%20incentives%20

4. Deloitte Articles. (2021). 6 Key Trends Transforming the Tax Function: The Wall Street

Journal

https://deloitte.wsj.com/articles/6-key-trends-transforming-the-tax-function-01625684526

5. OECD iLibrary. (2017). SPECIAL FEATURE: Electronic services in tax administration:

Revenue Statistics in Asian Countries.

https://doi.org/10.1787/9789264278943-en
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6. PWC. (2022). Individual- Taxes on personal income.

https://taxsummaries.pwc.com/jamaica/individual/taxes-on-personal-income