Who has to file an Income Tax Return for corporations ?
Any entity incorporated in St. Christopher and Nevis. This also includes any non-residents (whether a corporation or otherwise) with a permanent business establishment in St. Kitts or Nevis. A corporation is required to file even if it did not have any business transactions during the year or was granted a tax holiday.
When are the tax returns due ?
The Corporate Income Tax Return is due three and one half (3½) months after the fiscal year end of the company. For example, if the year end of the corporation is he 31st December, the Corporate Tax Return must be filed with the Inland Revenue Department by the 15th of June, the Corporate Tax Return must be filed by the 15th of April of the following year. Similarly, if the corporate year end is the 30th of October.
What happens if I don’t file a return ?
Every corporate entity is required to file a Corporate Income Tax Return!. If a taxpayer fails to file, the Comptroller has the discretion to make an assessment based on the relevant information available at that time or to make an assessment to the best of the Comptroller’s judgment. While the return remains unfiled, the Comptroller can indefinitely reassess the ‘best judgment assessment’, as many times, as new information is discovered.
Can an extension be granted?
Any extension to file returns or pay taxes can only be granted by the Comptroller. The taxpayer must make an application in writing to the Comptroller outlining the specific reasons for the extension. Generally, circumstances that were beyond the control of the taxpayer, such as a catastrophic event or a death in the immediate family, are considered valid reasons for requesting an extension. The granting of an extension will result in no late filing penalties being assessed. However, interest charges will not be waived. (see Extension Of Time To File a Tax Return and When Is Income Tax Due)
When is income tax due?
Taxpayers are required to pay their income tax in installments. Installments are due at the end of each quarter of the calendar year– which are, the 15th June, the 15th Amendment Act No. 6 of 2006). Installment notices are mailed out each quarter one month prior to the due date. If you do not receive a notice, contact the Inland Revenue Department to have another sent to you or you may come into our office. Any balance owing on a Corporate Income Tax Return is due on the filing deadline of the return. If payment is received after that date, interest will be charged commencing on the filing deadline and will be charged up until the amount owing has been fully paid.
Is payment due if I did not receive a tax notice?
Yes, payment is due before the due date or interest will be charged, even if you did not receive a notice. It is the responsibility of the taxpayer to ensure that their obligations to our society are being met. It is also the responsibility of the taxpayer to update their contact information, including e-mail addresses, with the department when there is a change. If you do not receive a notice before the due date, contact the Inland Revenue Department to have another sent to you or you may come into our office. Not having received a notice is not a valid reason for late payment of taxes.
What is a Best Judgment Assessment?
A Best Judgment Assessment (BJA) is an assessment by the Inland Revenue Department (IRD) to the best of the Comptroller’s judgment after taking into account all relevant information which has been gathered. Applying his or her own intelligence and deciding on the question of income and tax, were the IRD completes an assessment in this manner it is termed as a BJA. A tax officer/inspector can then carry out an assessment to the best of his/her professional judgment. The best judgment assessment takes into consideration various findings which may aid in arriving at an estimation of the quantum of taxable turnover and thereby determine the quantum of taxable amount payable.
When can a Best Judgment Assessment be issued?
Pursuant to Tax Administration and Procedures Act No.12 of 2003, Section 13 (3)
“where a taxpayer fails to file a tax return as required, the Comptroller may make an assessment of the amount of tax payable, based upon such relevant information as may be available to him or her, or make an assessment to his or her best judgment.”
This is supported by the Income Tax Act Cap 20.22 Section 52 (3) which asserts that,
“where a person has not delivered a return and the comptroller is of the opinion that such person is liable to pay tax, he or she may, according to the best of
his or her judgment, determine the amount of the chargeable income of such person and assess him or her accordingly, but such assessment shall not affect any liability otherwise incurred by such person by reason of his or her failure or neglect to deliver a return.”
Therefore to summarize a BJA can be issued in cases where:
1. The taxpayer fails to file within the filing period.
2. The taxpayer fails to submit information requested within the deadline stipulated.
3. There is reason to believe that the taxpayer is underreporting or the Department is not satisfied with the accuracy and completeness of the taxpayer’s filings submission.
4. New information is made available to the Department that a previously issued BJA or assessment was based upon incorrect information.
What records should be kept and for how long ?
You are required to keep all supporting documents and records to support the Corporate Income Tax Returns filed for at least six years after the date on which the
original tax return was required to be filed.
Who can be audited ?
Any entity which was incorporated in Saint Christopher and Nevis, or an individual operating a business, can be audited by the Inland Revenue Department.
What kind of accounting system should I use ?
Taxpayers are required by law to keep in the English language a proper set of book of accounts. There are many systems available that will be sufficient to meet the book of accounts standards required by the tax legislation, both computerized and manual.
Are audited financial statements required ?
Taxpayers are required to file Audited Financial Statements using IFRS or other recognized GAAP requirements for submissions to the Inland Revenue Department.
These financial statements must be compiled by an independent third party. The department will also accept compilations and reviews that are performed using IFRS and other recognized GAAP requirements by an independent third party.
Are there any penalties associated with income tax ?
The penalty for late filing of a return is 5% of the amount of tax owing and an additional 1% of that amount for each month or part of the month during which return is still outstanding. (Section 37 (1) (a) and (b) of the Tax Administration and Procedures Act) There is also a penalty of $1,000 where the Comptroller makes a demand in writing that a person files a tax return or provides any other information that is relevant to the determination of the taxpayer's tax liability, and that person fails to file the return or provide the information within the time specified. An additional one thousand dollars ($1,000) penalty can be applied to a second request if that request also is not responded to appropriately. (Section 37 (2) (a) and (b) of the Tax Administration and Procedures Act).
Where any tax is underpaid, or may have been underpaid as a result of an incorrect statement or a material omission in the taxpayer's tax return, or other incorrect
information provided by the taxpayer, and that statement or omission or incorrect information is a result of intentional conduct or negligence on the part of the taxpayer, the taxpayer shall be liable to a penalty in the amount of 25 percent of the underpayment. (Section 38 of the Tax Administration and Procedures Act).