Government will be implementing a new Personal Income Tax regime which takes effect on January 1, 2016, according to the Inland Revenue Department of Saint Lucia.
The new regime is aimed at simplify the tax system to make the filing of an income tax return easier.
The department said it will be looking to minimize the number of allowances and deductions that can be claimed together with the associated documentation that would be required.
In addition, the number of tax bands was decreased to two to ease the calculation of taxes.
Inland Revenue Department official Sophia Henry said that one of the primary changes would include, Personal Income Allowance Tax being increase from $18,000 to $25,000.
Henry said most of the allowances and deductions have been eliminated and reduced to four major categories and persons would be able to claim for future benefits (Insurance premiums, life annuities, NIC contribution and contribution to approved pension fund, mortgage interests, and property tax payments).
It was explained that over 2,000 employees will no longer be subject to Pay as You Earn (PAYE) Tax.
“Persons who earn $1,533 would be subject to PAYE, but under the proposed system with the Personal Income Allowance of $25,000 and medical of $400, someone must earn at least $2,117 to be subject to PAYE. In addition to the $25,400, pensioners will be entitled to an allowance of $6, 000,” she explained.
Another new feature of the regime is the implementation of electronic transactions, which will encourage taxpayers to utilize the department’s e-filing and e-payment portal.
The new system is also aimed at enhancing the “ease of doing business” and helps to minimize the tax liabilities of the lower income taxpayers and improve the progressivity of the tax system.
An increase in the personal allowance significantly reduces, if not eliminates the tax liability for lower income taxpayers, according to Inland Revenue Department.
It is anticipated that a higher personal allowance and a reduction in the number of allowances and deductions would generally allow for lower income taxpayers to pay less tax.
The department is urging employers and employees to comply with the new measures to be implemented in 2016. It also plans to sensitize the public on the new changes.