Tax administrative incentives for businesses

The Solomon Islands Government through the Inland Revenue Division (IRD) is looking at granting tax administrative incentives to businesses that are seriously affected by the COVID-19 global pandemic as part of its economic response plan.

IRD Commissioner, Mr Joseph Dokekana highlighted this during an Information Session on Friday 31 July hosted by the Solomon Islands Chamber of Commerce and Industry (SICCI) for its member businesses.

Mr Dokekana said the objective of this measure is to provide, on case by case basis, tax relief to taxpayers (businesses) facing serious financial hardship or experience cash flow issues due to COVID-19 on production of proof of actual hardship.

“This measure includes temporary deferment of tax payments, instalment arrangement, reducing instalment amount and extending instalment period,” he said.

He said only businesses in the tourism sector are entitled to a tax holiday effective for five years starting from the 2020 financial year.

“The Tax holiday incentives for tourism related businesses is provided in the Second Schedule Part I of the Income Tax Act and shall apply in full.

“The incentive includes an exemption from income tax on the income and profits accruing to any tourism investor operating tourist hotels of three hundred or more rooms, tourism resorts of fifty or more bedrooms; or other tourism-oriented projects including resorts,” the IRD Commissioner highlighted in his presentation to SICCI members.

In terms of provisional tax adjustment, Mr Dokekana said relief is available for businesses in other sectors where circumstances have changed due to COVID-19 and businesses are able to make an estimate or re-estimation of provisional tax for the second, third and fourth quarters of 2020.

“In applying businesses will need to provide details of downturn in sales for the last quarter and evidence of cash flow difficulties including three (3) months bank statement,” he said.

For goods tax and duty incentives, Mr Dokekana said normal exemption process application will be applied while a ministerial order will be made to exempt personal protective equipment from goods tax and duties like hand sanitizers, face masks and gloves.

He revealed that automated penalties arising from tax liabilities were switched off from January this year to 30 June 2020 while only manual penalties will be imposed for fraud and tax evasion.

The IRD Commissioner also informed businesses that the deadline for lodging of income tax returns for 2019 has been extended by three months to the end of June 2020 automatically for December lodgers.

“The due date for income tax payment is to be extended by one month to 31st October or by one month for non-December lodgers.

“For those who may want to have more than three months extension to lodge returns, they will have to apply to the Inland Revenue Division,” he said.

Mr Dokekana further highlighted that consideration will be given to reviewing the guidelines on case by case basis of the recovery measure to garnishing of wages, bank accounts and the seizure and selling of assets. These measures can have severe impacts on some taxpayers in the current circumstances.

Meanwhile, the IRD is putting some restrictions on payments released by the Treasury Division in relation to tax debt.

This restriction applies to those who have not paid their tax or have not responded to IRD despite receiving multiple debt notices. It is understood that this restriction also applies to those applying for the Government’s COVID-19 Economic Stimulus Package.

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