The Corporation Tax Amendment Bill 2016 seeks to reduce the corporation tax rate from 30 to 27.5% for manufacturing and non-commercial companies and prescribes the minimum tax rate at 2% of the turnover of a commercial company or 40% of taxable income, whichever is lower.
It also introduces a dual tax rate for companies carrying out both commercial and non-commercial activities. This means that the non-commercial part of the business will benefit from lower corporate tax rates of 27.5% but will pay the commercial tax rate of 40% fir their commercial operations.
Finance Minister, Winston Jordan tonight (Thursday January 5, 2017) in the National Assembly said corporate tax was last reduced in 2012 from 35 to 30%. The Minister said the Bill contains several measures that are poised to improve the manufacturing sector in numerous ways.
While commending the efforts of the Finance Minister, Opposition MP Irfaan Ali said when the net effect of the Bill is examined, what the minister is hoping will be the outcome in actuality will not be achieved.
Ali pointed to the Amaila Falls Hydropower Project as one of the most transformative initiatives that can single-handedly improve the Manufacturing sector and not this approach. Additional costs, the MP said would be incurred by the manufacturers, which would then trickle down to the ordinary consumers.
Minister Jordan in his counter arguments said manufacturers only stand to gain and not lose as suggested by the Opposition.
PPP/C Chief Whip Gail Teixeira raised concerns with the Bill having a retroactive date on a taxation matter, however, the Speaker was advised by the Senior Counsel that the date January 1, 2017 can remain since a retroactive date was used several times in the House. The Opposition MP withdrew her amendment.
The Corporation Tax Amendment Bill 2016 was passed by a Government majority in the National Assembly.
