History of Tax Administration in Jamaica


Jamaica’s first tax system was introduced in 1664 by the English Governor, Sir Thomas Modyford. There is no evidence that such a system existed during the time of the Tainos or during the Spanish occupation.  At first the Governor wished to set a firm figure which would be collected every year, but the Assembly or House of Representatives felt that its members as representatives of the people should decide how much should be collected each year and by what means.


In 1728 during the reign of King George II the House agreed to impose certain Customs duties as a basis for the financing of Local Government’s operations.


It was not until 1867 that the Assembly agreed to regular, fixed rates of tax, which were to be set by the laws they made.  Two years later in 1869, the Customs, Excise and Revenue Department was established.  This Department later became the Collector General’s Department. Over the years the law was changed periodically to decide how taxes were to be collected and how much was to be paid by taxpayers.

1900 – 1929

Income Tax was introduced in Jamaica at the end of the first (1st) World War by the Income Tax Act of 1919 and came into operation in 1920.  This money was used to purchase tractors and railway equipment which had been used in the war and were no longer needed.  These implements were used to carry out certain public works and to assist in transportation.  The new jobs created were given to soldiers who were returning from the war.  There was initial resistance to the levying of taxes on income but over the years taxpayers have grown accustomed to paying Income Tax.

The 1919 Income Tax Act provided for:

  1. Tax to be charged for 1920 on the income of 1919 and thereafter for each subsequent year on the income of the preceding year.
  2. Return of income to be rendered by every person liable to pay tax.
  3. An Assessment Committee to assess the tax then notify the taxpayer and the Collector General who was charged with the duty of collecting the tax (a convenient arrangement) since the Collector General’s Department had officers in various parts of the Island.

The original Act also provided for the appointment of persons to assist taxpayers in completing their income tax returns and because of their convenient island wide organization, Collectors of Taxes were appointed the first assistors.

The Assessment Committee consisted of three members two forming a quorum. Originally they exercised the duties and enabling powers under the law, through a small staff of five (5) persons. The committee met at convenient intervals to approve assessments and sign extracts from the assessment list to be sent to the Collector General for collection of the tax charged.


Because of the growing number of taxpayers, in 1939 the law was amended to enable the number of the Assessment Committee Members to be increased and to provide for the appointment of a Commissioner of Income Tax and “such other persons and officers as may be necessary for the proper administration of the law”.


In 1940 a Commissioner and a Deputy Commissioner were appointed.  The Commissioner was made a member of the Assessment Committee.


The method of determining a person’s liability to tax by reference to the income of the preceding year remained the same up to 31st December, 1952, at which time two major changes were introduced.


1.      The Income Tax (Employment) Act of 1952 paved the way for the introduction of a Pay-as you-earn (PAYE) System from 1st January 1953.  Employees then became liable to pay tax on their wages and salaries as they were earned.  Other sources of income remained taxed on the income of the preceding year. This included all income such as that from trades, businesses, professions, vocations, investments and rents.

Under the P.A.Y.E. System the employee receives his pay less the tax chargeable on it with the employer being responsible for remitting the tax he deducts to the Collector of Taxes.  The significance was the fact that in the first year of operation of the PAYE system, the amount of tax collected was more than double that collected in the immediate preceding year.  The benefit to the employee was apparent – instead of having to put aside out of his pay sufficient money to pay the tax due, perhaps in a year’s time, or even longer, perhaps at a time when he may be unemployed – tax was now paid as the income was being earned.

2.      In 1954 the Income Tax Law was consolidated into one Act – Act 59 of 1954. The Income Tax (Amendment) Act provided that all income, profits and gains were to be taxed on the actual income of the year of assessment – that is, the year to 31st December.  The Act also brought into effect a system of taxation which is commonly known as “Self Assessment” and which was based on the concept of the taxpayer’s voluntary compliance with the Income Tax Law.  Under this system the taxpayer pays during the year of assessment, and by the 15thMarch in the following year, he makes a return of income accompanied by a statement of his actual tax liability showing the amount, if any, of the tax that remained unpaid.  Such tax remaining unpaid was deemed to be the subject of an assessment with the due and payable date being 15th March.  The taxpayer would therefore assess himself and pay his tax without the intervention of the Commissioner or a Collector of Taxes.

The Commissioner’s power of making assessments under the Law was necessarily retained and could be used if a taxpayer failed to make a return or if a return was incorrect and there was additional liability to tax.

The taxpayer could within thirty (30) days from the date of service of a notice of assessment, make objection thereto and the Commissioner gives his/her decision in relation thereto.  If the taxpayer was dissatisfied with the Commissioner’s decision he could appeal to an Income Tax Appeal Board. Appeal from the decision of this Board could further be made to a judge in chambers.

The 1st January, 1955 saw the abolition of the Assessment Committee (Income Tax Law 1954) and the transfer of all the powers and duties of the Committee to the Commissioner of Income Tax who had the responsibility for the administration of the law.


Considerable changes were introduced in the late 1960s.  It was in during this period, in 1965, that incentive allowances were introduced for sugar manufacturing.  The year 1969 provided that the basis of assessment from 1st January 1968 should be for the actual income for the year.  It was also in 1969 that the system of self-assessment was introduced, which is still in existence.


The collection of income tax remained the responsibility of the Collector General until 1971, when, the Commissioner of Income Tax was given like powers as the Collector General, and could now exercise those powers in relation to the collection of tax throughout the island.  The Income Tax Department was also formed.  A Revenue Court was established on February 1, 1972 (through Act 29 of 1971), strengthening the appeals process.


The year 1985 saw further changes in the Revenue Administration of the country. Under the Revenue Administration Act of 1985 the Collector General’s Department became defunct and two new departments emerged, The Inland Revenue Department and The Customs and Excise Department.


The 1990’s heralded significant changes in Tax Administration in Jamaica.

Introduction of GCT Department

In 1991 the consumption tax system was substantially reformed with the introduction of the General Consumption Tax (GCT) Act which saw the Excise portion of The Customs and Excise Department separated and used to form what was called the General Consumption Tax Department and the introduction of a General Consumption Tax.

Improving Resources and Organizational Structure of the Jamaican Tax Administration

For many years the Jamaican Tax Administration faced a number of very significant challenges which were seriously constraining its capacity to effectively and efficiently deliver quality services to taxpayers and meet its tax collection and control targets. The main issues were as follows:

(i)                 Departments administering the taxes were largely organized on the basis of specific taxes for which they carried out all the required administrative functions except collection. For example, there was an Income Tax Department, a GCT Department, and a Stamp Duty and Transfer Tax Department each of which carried out returns processing, auditing, assessment, compliance, and enforcement activities for a single taxpayer. As a result, many opportunities for economies of scale in such areas as general administration and property management were lost.


(ii)               There was no formal mechanism whereby information relating to individual taxpayers could be routinely shared between Tax Administration departments so that assessment, compliance and collection activities could be carried out on a uniform and consistent basis and in an efficient way. In fact, the Income Tax Act specifically precluded the sharing of income tax information collected by that Income Tax Department with anyone else.


(iii)  The legislative framework for tax administration had other serious weaknesses. In particular, tax commissioners were severely restricted in their powers to obtain information from third-party sources such as accountants, attorneys-at-law and financial institutions. Further, tax laws were rather complex in structure, largely because they tended to be developed in an uncoordinated, piece-meal way in response to urgent budgetary demands that arose from time to time.

(iv)  Because of limitations in available resources, several offices of the tax administration – particularly collecting offices in rural areas – were in a poor physical state. The uncomfortable working conditions demotivated staff and severely restricted the quality of service they provided to taxpayers.


(v)    The majority of tax administration staff was poorly paid, adding to the level of demotivation among them.

(vi)              Jamaica had a very significant underground economy, and compliance levels, particularly in direct taxes (taxes paid by the taxpayer to the various Collectors of Taxes e.g. Income Tax), were quite low. Taxpayers who were compliant often expressed resentment that an unreasonable burden fell on their shoulders precisely because so many were able to escape the tax net.


(vii)            The Tax Administration also received adverse criticism that tax revenues were carelessly and wastefully spent by government (though the Tax Administration did not participate in making expenditure decisions).


(viii)     Members of staff who were technically strong were often promoted to management positions, though they did not necessarily have an interest or competence in playing genuine management roles. Accordingly, management staff often immersed themselves in technical operational work, and in many areas managerial roles such as planning and controlling were almost ignored.

Tax Administration Reform Project (TaxARP)

In 1994, the Government of Jamaica and the World Bank signed a contract for the funding of a six-year project aimed at radically overhauling the tax administration. The contract for the development of this Tax Administration Reform Project (TaxARP) was awarded to an American firm of consultants, and was run from a project office with a full time Director and supporting technical and administrative staff. Decisions on policy issues deliberated on by the consultants were made by a steering committee which comprised the Project Director and all the Commissioners of the then existing tax administration departments.

The project concentrated on five major (overlapping) components as follows:

1.      Broadening the Tax Base

2.      Strengthening Organization and Management

3.      Improving the Control of Tax Evasion

4.      Improving Tax Collections

5.      Facilitating Voluntary Compliance


1.      Broadening the Tax Base.

The basic tool for this component of the project was a unique identifying number for each taxpayer called the Taxpayer Registration Number (TRN) which was introduced in 1996. Any person having any interaction with a tax administration department was required to use this number, which would be the same number used by the taxpayer for all taxes. This would enable the administrators to easily make linkages with compliance status across the different tax types. Legislative changes were also made to increase the penalties for failure by liable persons to register for GCT, and to authorize the assessment of persons for the period of non-registration. The number of identified taxpayers has been increased by about 60% since the inception of the project.

Strengthening Organization and Management

Under this component of the project, a radical reorganization of the structure of tax administration was undertaken. The main principles being:

(i)                 Before the reform, Tax Commissioners reported directly and independently to the Financial Secretary in the Ministry of Finance.  Since the Financial Secretary oversees many other programme areas of the Ministry, this span of control was extremely wide, and little focused leadership could be given to tax administration as a whole. Under the reform project, Tax Commissioners reported to a Director General of Tax Administration, whose management skills together with experience and expertise in taxation; enabled him/her to focus on the coordination of Tax Administration and coordination of tax administration matters.

(ii)               Tax departments no longer administered specific taxes; rather they were organized on the basis of the functions they carried out, and these functional responsibilities extended across all tax types.


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