Income Tax applicable to individuals and corporations from January 2021

December 10, 2020 – His Mount Vema Majesty’s Treasury announced that as of January 1st, 2021 all entities of the Kingdom of Mount Vema will be liable to income tax. The announcement also includes individual income which will be applicable to all individuals employed by a Mount Vema entity regardless of their geographic location, except when exemptions apply.
 
The current tax rate which will be in force as of January 1st, 2021 is as follows:
 
Corporate Income Tax: 10%
Individual Income Tax: 5%
Income from investments - Tax: 2.5%
Credits, including tax credits: 1.5%
Income from Charitable Activities - Tax: 0%
 
The taxable income of the taxpayer resident within the Vema Seamount Territorial waters will be the total income less income producing expenses and other deductions. Only the net gain from sale of property, including goods held for sale, will be included in income.
 
Income of a corporation's shareholders will include distributions of profits from the corporation. Deductions will include all income producing or business expenses including an allowance for recovery of costs of business assets.
 
The Kingdom of Mount Vema will require self-assessment of the tax and will require payers of some types of income to withhold tax from those payments. Advance payments of tax by taxpayers may be required. Taxpayers not timely paying tax owed may be subject to significant penalties, which may include jail for individuals or revocation of an entity's legal existence.
 
Taxations will be the responsibility of The HMVM - His Mount Vema Majesty's Revenue Services, which will be the department responsible for the administration and collection of direct taxes including individual income tax and corporation tax, capital taxes such as capital gains tax and inheritance tax, payroll tax, indirect taxes (including value added tax), excise duties and stamp duty (currently Title Plan tax).
 
Employers Reporting (Individual Income Tax)
Employers will be responsible for Withholding and sending the Income Tax on to The Revenue Services each month, along with various other employment taxes. The amounts deducted from each payment to individual employees must be reported using an electronic submission on or before the day payment is made. When reporting employee income, it must include bonuses, overtime and non-cash payments such as "benefits in kind" (including the use of a company car, company property, etc). At the end of each tax year, the employer must give the employee the FormA121 as a certificate of Pay, and Tax deducted during the year.
 
A FormE121 must be given by an employer to an employee on cessation of employment to certify the employee's pay, and tax contributions from the start of the tax year to date of cessation and also certify that the deductions have been made in accordance with the instructions given by His Mount Vema Majesty's Revenue Services.
 
Legal Entities Reporting (Income Tax)
All legal entities must submit FormN1220 to the Revenue Services with their respective annual reports at the end of each tax year.