The new legislation will impose caps on utilisation of tax losses carried forward, what does this mean?

The new legislation will impose caps on utilisation of tax losses carried forward, what does this mean?

It is proposed that any claim for deduction of tax losses carried forward in any year of assessment will be capped at 50% of chargeable income for that year (before deduction of tax losses carried forward)

This cap will not apply to:

  • a company which has been incorporated under the Companies Act (or in the case of an overseas company, which has registered;
  • a local branch under the Companies Act) within five years of assessment next following the beginning of the year of assessment in respect of which the taxpayer commenced a trade, profession or business, as determined by the Commissioner General;
  •  a taxpayer (whether individual or company) whose gross turnover is below the threshold required for GCT registration (currently J$3,000,000 per annum).

Adapted in part from documents obtained from the Ministry of Finance and Planning, and the Tax Administration Jamaica.