After the amendments made to the General Consumption Tax act (GCT) in 2014, lets take a look at how the law currently stands.
This article will highlight a few key areas.
Who Is Required To Register?
All persons engaged in a taxable activity are required to apply for registration under the GCT Act.
Exemption from Registration
Anyone engaged TOTALLY in the following will NOT have to register for GCT:–
any activity carried on essentially as a private recreational pursuit or hobby;
any engagement, occupation or employment under any contract of service or as a director of a company;
any good or service which is exempt from the GCT (Third Schedule of the General Consumption Tax Act).
The Threshold for having to register.
The Threshold is set at gross value of supplies of three million dollars ($3,000,000.00). The Threshold amount is the consideration paid or payable on all supplies made. Where a person is engaged in both taxable and exempt activities, the amount received from exempt supplies must be included when computing the gross value of supplies.
There are four basic types of returns:
The General Consumption Tax return (form 4A ) which this guide explains and describes;
GCT return form 4A, (Standard Return) is to be used by all Registered Taxpayers
The Special Consumption Tax return (form 4C) which is to be filed by the manufacturers of prescribed goods, namely.
The Tourism Activities Tax return (form 4D) which is to be filed by persons who carry out a tourism activity; and
- Alcoholic beverages
- Tobacco products and
- Petroleum products.
The Tourism Activities Tax return (form 4D) which is to be filed by persons who carry out a tourism activity;
and The General Insurance Tax return (form 4E) which is to be filed by persons carrying out general insurance services
For 4B has been discontinued and no longer available for download.
When to File Your Return
As a Registered Taxpayer, you will be required to file a General Consumption Tax Return on form 4A within one month of the end of your taxable period. For example for taxable period July 2012, the monthly return would be due to be file on or before August 31, 2012.
GCT on Imported Goods and Supply
General Consumption Tax (GCT) is levied and collected at the time goods are entered for home consumption under the Customs Act. The person importing the goods is liable to pay the GCT to Customs on the same document which is used to pay the Customs Duty.
Registered Taxpayer importing services subject to tax are required to self-assessed and account for the GCT (this mechanism is called a reverse charge)
Supply for the purposes of the GCT Act includes:‑
the sale, transfer or disposition of goods by a Registered Taxpayer so that the goods sold, transferred or otherwise disposed of no longer form part of the assets of a taxable activity;
the exercise of a power of sale by a person ‑other than a registered taxpayer in satisfaction of a debt owed by a Registered Taxpayer;
and the provision of services.
Application for registration
To apply for registration, a person must complete a GCT Application Form, Registration form – GCT‑ 1 . The form may be obtained online or from a TAJ Tax Office/Collectorate or Revenue Service Centre. To be able to register for GCT, a person must have a valid Business Taxpayer Registration Number (TRN). Where an applicant does not have a valid TRN, he must apply for same at the Taxpayer Registration Centre (TRC) or Tax Office/ Revenue Service Centre (RSC). The application form for the TRN may be obtained online or from any TAJ Tax office or the TRC.
Any person starting a taxable activity after the 22nd October 1991 has twenty‑one (21) days after starting this taxable activity to make an application to register.
Failure to apply for registration makes you liable to a penalty equal to:
Two hundred dollars ($200.00) for each complete month of the period of non‑registration in the case of a person liable to be registered as a Registered Person;
OR Five thousand dollars ($5,000.00) in the case of person liable to be register as a registered taxpayer and the person is an individual and in the case of a company, ten thousand dollars ($10,000.00). In addition interest of two and one-half percent (2 ½%) per month of the tax liability for the period unregistered.
CANCELLATION OF REGISTRATION
The Commissioner General may cancel the registration of a Registered Person if he is satisfied that the person no longer carries on a taxable activity. He may also cancel the registration of a Registered Taxpayer if he is satisfied that the Registered Taxpayer no longer qualifies for registration as such.
Before cancellation, the Commissioner General will notify the Registered Person or Registered Taxpayer of his intention, stating the reason.
Any person notified of a proposed cancellation may object. This objection must be made within thirty days of the date of service of the notice and must be in writing, stating precisely the grounds of the objection.
If the Commissioner General, after consideration of an objection decides to cancel a registration, he must inform the person in writing of the decision and of the right of appeal. Where the person is a Registered Taxpayer, he must return the Certificate of Registration to the Commissioner when notified of the decision.
Failure to return to the Commissioner General of Tax Administration the Certificate of Registration is an offence against the Act.
Other points of interest
Also affected within this amendments is the deferment system which previously only applied to manufacturers of taxable supplies, which are those suppliers of goods that attract GCT, and only inputs acquired for use in the manufacture of taxable goods.
Now it has been amended to benefit manufacturers, who are engaged in mixed activities (which includes) the production of goods, which are taxable and also exempt goods on which GCT does not apply.
The act also outlines the accounting requirements for GCT, and how to record GCT for both the accrual and cash basis..