Jamaica News, Kingston: Industry, Commerce, Agriculture and Fisheries Minister, Hon. Audley Shaw, is calling on members of the local chapter of the Institute of Internal Auditors (IIA) to support the Government’s thrust to get more informal businesses regularised.
He said regularisation will enable them to access benefits such as financing at reasonable rates, better positioning them to participate in productive activities, which will redound to their benefit and that of Jamaica.
The Minister, who was addressing the IIA’s business conference at The Knutsford Court Hotel, New Kingston, on Thursday (May 31), noted that up to 45 per cent of local businesses operate informally, failing to adhere to the requisite processes involved in establishing entities.
These include developing a business plan, registering their operations, and paying relevant taxes.
He argued that the informal environment in which many businesses operate, particularly Micro, Small and Medium-size Enterprises (MSMEs), places them at a disadvantage and often exposes them to abuse.
He noted, for example, that they might be forced to borrow money at 30 or 40 per cent interest rate.
“So right away, you are virtually excluding yourself from certain types of productive activities (such as) manufacturing and producing for export in order to be in the competitive export market (because) you can’t do that at 30 to 40 per cent interest rate,” the Minister pointed out.
In this scenario, he said, business operators are “automatically relegating” themselves to trading activities where “you have to be turning over (your inventory and cash inflows) within a matter of weeks in order to pay those kinds of rates.”
Mr. Shaw noted that with regularisation, businesses can access financing at rates as low as seven per cent, and pay the equivalent of 17.5 per cent corporate tax, instead of 25 per cent, if this is paid on time.
He told the IIA members that “you can play your part in helping to motivate potential clients (to regularise), so that they can become successful and, in the process, collectively help the country to (grow).”
Source: JIS News