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Tax nightmare for small businesses

The contracting economy and additional tax burdens will force companies to lay off staff, business operators say.

The contracting economy and additional tax burdens will force companies to lay off staff, business operators say.

KINGSTON — Small importers have described the new Customs Administration Fee as a nightmare, with many predicting closure of their businesses or massive layoffs.

The CAF, which replaced the Customs User Fee and which became effective April 1, should see the Government raking in $1.2 billion as part of efforts to broaden its General Consumption Tax base.

But the new tax measure has left customs brokers and importers scrambling to clear goods and searching for answers.

“This is a terrible situation for small businesses,” Ainsworth Mornan said. The St Ann-based businessman, said he has had to reprice his goods to include 18 per cent mark-up “to just about break even” since the new measures took effect.

Mornan, who rents construction equipment, said he currently has a 40-foot container to be cleared and is anticipating huge increases in processing fees on the advice of his custom broker.

In actuality, the $3,500 customs processing fee that was applied to such shipments now costs $20,000. Importers whose containers are inspected on their sites will also need to pay $25,000.

Previously, processing fees, environmental fees and the CUF, which was a flat two per cent customs, insurance and freight cost, were not included in the GCT base.

Among the changes at customs is the C73 authorisation form prepared by customs brokers for their clients, an annual process which previously carried no cost but for which importers will now have to pay $5,000.

Additionally, the C87 prepared for both exporters and importers now necessitates a per shipment charge of $3,000, up from the previous $600.

Emergency shipment clearances jumped from $1,200 to $10,000 per letter clearance. (Observer)

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