Leading Audit Firm Hails Plans to Boost Capital Allowance For Businesses

One of the country’s leading auditing and assurance firms, Price-Waterhouse-Coopers, PWC, has endorsed the government’s plans to accelerate capital allowances for business.

The firm published its commentary on Wednesday following Finance Minister Fayval Williams’ maiden budget presentation the day before.

However, PWC is calling for better particulars on the initiative along with funding arrangements for the three-year phase-in of the two-million-dollar income tax threshold.

Chevon Campbell has that story.

A capital allowance is essentially a tax discount for businesses when they purchase large-scale long-term inputs such as machinery and buildings.

For example, if a bakery buys a new oven, its capital allowance permits it to make only partial tax payments on the item over an extended period, rather than the full amount up front.

This is with the expectation the company will have the asset for a long time.

As part of her budget debate, Minister Williams outlined plans to enhance that allowance over the next two years to boost economic growth.

The Minister says in some instances that rate will nearly triple in year one.

According to PWC, given the significant proposed temporary enhancement in rates, they expect manufacturers, producers and other commercial enterprises to take advantage and invest and retool their business in 2025 and 2026.

However, they want clarification as to whether it includes expenditure on the purchase, construction and renovation of assets.

PWC anticipates that the programme will result in a more accelerated tax shelter and a reduction in income tax payable in earlier years.

It says the overall impact should be significant and may result in some taxpayers generating tax losses after claiming the accelerated allowances.

Meanwhile, PWC is criticising some aspects of the adjustment of the personal income tax threshold.

The measure will have the effect of removing nearly 30 thousand persons from the government’s tax roll over the next three years.

This is at a cost of 14 billion dollars in lost government revenue.

PWC says administratively, increasing the threshold with effect from April one, creates greater challenges for employers who are then required to make mid-year adjustments to payroll systems.

The auditing firm also says it remains to be seen how this threshold increase will be funded over the next three years.