Thread by @marcgayle

This bill that Dr. Clarke introduced to, and got passed by, the House, basically gives all registered MSMEs (companies with annual revenues of $500M JMD or less), a tax credit on the first $1.5M of profits they earn.

//Mini-Thread

#FinanceTwitterJa

https://twitter.com/drnigelclarkeja/status/1339000164107882496

In other words, if your company makes $10M revenue and $1.5M profit, you effectively pay no corporate income taxes.

The corporate tax rate is 25% for non-financial firms. $1.5M x 25% = $375,000.

This is a tax credit, so effectively GOJ pays the tax for you.

You have to file your taxes though, to benefit.

Dr. Clarke initially introduced this idea in the opening of the budget debate in March.

See the tweet below:

https://twitter.com/marcgayle/status/1237519894947811328

If you run a small company that has the following financials:

Revenue: $10M
Expenses: $8M
Taxable Profits: $2M
Tax Liability: $500K (25% of $2M)
Tax Credit: $375K
Effective Tax Liability: $125K

So on $2M of profits, rather than owing $500K, you now owe $125K.

This is a great incentive for registered MSMEs.

It is also a nice incentives for those that have been operating informally and want to begin filing, now is a good time to get registered so you can take advantage of this tax credit and be fully compliant.

This is effectively the MSME version of the election winning “$1.5M” tax break for PAYE workers.

It works similarly, but on profits for MSMEs.

This can also be combined with the Employer Tax Credits.