The Ministry of Revenue & Customs is announcing a new small business tax after changes to the Income Tax Laws coming into effect on July 1. The new tax is compulsory unless business owners apply for an option to remain in the current profit based system.

The new small business tax targets “sole traders in business such as market/fair operators, farmers and fishermen earning less than $100,000 Pa’anga”.

In a statement, the Ministry said that the new small business tax does not apply to companies and professional services such as medical, dental, legal, accounting, financial management, engineering consulting or other similar services.

The new tax is based on gross annual turnover (sales) and is split into four rates:

• Turnover $0 - $10,000 tax = Lump sum $100
• Turnover $10,001 - $30,000 tax = Lump sum $250
• Turnover $30,001 - $50,000 tax = Lump sum $500
• Turnover $50,001 - $100,000 tax = 2% of turnover

Michael O'Shannassy of the Ministry of Revenue said there is an option to elect to not be in the system and to remain in the current profit based system. “But a small business must first apply to the Chief Executive Officer to do so using a form available on our website or at our offices, he said.

“The new small business tax is compulsory for all small busisness taxpayers - those under $100,000, that is everybody is in the new turnover system beginning 1 July 2014. The lump sum amounts for those under $50,000 are not due until 31 Otober 2015 and the first quarterly payment and return for those between $50,000 and $1000,000 is due on 31 October 2014,” he said.