LEGCO PASSES PAYROLL TAXES BILL

Legislative Council (LEGCO) passed the Payroll Taxes Bill on December 21, paving the way for the implementation of the new tax system from January 1, 2005.

Deputy Chief Minister and Minister of Finance Honourable Ronnie W. Skelton, moving the second reading of the bill, said Government’s policy is that relief in corporate taxes for businesses must be matched with equal or similar benefits for employees, whose contributions to the development of the Territory must also be recognised.

Minister Skelton said the payroll tax treats businesses and employees equally, while at the same time, ensuring the maintenance of a viable and strong revenue base for Government to continue providing necessary services for the people of the BVI.

The Department of Information and Public Relations hosted a live PUBLIC EYE programme on the payroll tax on December 28 on VITV Channel Five. The programme was broadcast simultaneously on most radio stations. Viewers and listeners were given the opportunity to call in to the programme with their comments and questions.

The panellists were Financial Secretary Mr. Glenroy Forbes, Commissioner of Inland Revenue Mr. Arnold Lettsome and Director of Internal Audit Mr. Wendell Gaskin, while Deputy Chief Information Officer Mrs. Geraldine Ritter Freeman moderated the programme.

The PUBLIC EYE programme was organised as part of Government’s public education programme, targeting both employees and employers, to improve their understanding of the payroll tax. Government also plans to organise seminars as well as open a telephone help line to further explain the payroll tax.

Employees’ contribution will be eight percent after a $7,500 tax threshold. This threshold is also applicable to employers’ payroll tax, including sole-owner businesses. In addition, company registration and licence fees will be increased from $300 to $350 and $1,000 to $1,100, respectively.

Government announced the payroll tax in November 2004 to take effect from January 1, 2005. The system requires that employers pay either a six or a two percent payroll tax, depending on the categorisation of their businesses. Class One (small) businesses will pay a two percent payroll tax, while Class Two (others) will pay six percent.

Class One businesses are those that employ less than seven persons, have a payroll of under $150,000 per year and make an annual turnover of less than $300,000. Class Two businesses are those that do not meet all three requirements of small businesses.