Tyrone Reid, Staff ReporterThe German public can't seem to get enough of Jamaican entertainers, and now the German Government wants a piece of the action - through taxes.
Since the formation of the 13-nation European Union (EU) several years ago, the laws have required that entertainers pay taxes. However, it was never enforced to the fullest and there were always means and ways of getting around it - until now.
Klaus Maack, managing director and owner of the German company, Contour Music Promotion, says entertainers performing in Germany and several other EU countries will now have to pay taxes to the Governments of those countries.
"Since the European Union started to harmonise in every direction, including in the area of tax law, they have started to think about all this money which is being taken out," said Mr. Maack, whose 22-year-old company is a leading reggae promoter in Germany. Contour Music Promotion organises the popular three-day reggae festival "Summerjam" held in Fuhlinger See Koln (a tiny German island) each year.
He told The Sunday Gleaner that this reasoning has led to a more unyielding approach to tax collection from foreign entertainers working in Germany.
And the tax man bites hard. Promoters who do not deduct the tax from an artiste's contracted income, will have to pay the 25 per cent out of their pocket, plus their mandatory 42 per cent of the net profit from the show(s).
"In the end the promoter will be at a loss," said Mr. Maack, who was in the island to attend the Caribbean Music Expo (CME) last month and to inform local entertainers about the tightening of the tax law.
He noted that the crackdown started in France "and now Belgium, Germany, Holland, Italy and others are implementing the system. (However) each country has its own community but they are trying to fit this together (to create) one system that will allow them to follow up the income from a European tour no matter where in Europe the tour started." It will take some time to harmonise the process and before it becomes a general law, the promoter noted. Several entertainment camps in Jamaica have already expressed their displeasure and Mr. Maack said he anticipated further tension between European promoters and reggae acts.
"This is a very dangerous development...when it is not done properly beforehand there are always big problems, discussions until you know, not fights but really aggressive situations surface."
He continued: "There is always a big row, because they are receiving shorter money and they don't understand why and nobody makes it public. Nobody tells the people in Jamaica that the law has changed throughout the European community."
Often German promoters organise the shows through a mediator who may not properly brief the acts about changes in the system.
"Now the entertainers turn around and ask why do they have to pay tax in Germany, they don't understand it. The persons who organise the tours have the responsibility to tell the artistes that the tax rules have changed in Europe, so when the act comes and they want US$10,000 and I say sorry I can only give you US$7,500 because US$2,500 (goes to the German financial ministry) and you will get a tax paid certificate for this, it usually does not go over well with the artistes."
The German Government has also approached the issue in the wrong way, reckoned Mr. Maack. "They don't understand the music business as such so they just ask for an average tax of 25 per cent of the earnings -- not like the usual where they tax the profit."
He told The Sunday Gleaner that the law does not take into consideration, special circumstances that arise in the world of music. "We want to tell the people who are responsible for the financial laws in Germany that this is not the correct way, you cannot take 25 per cent from everything, even on a small scale tour which does not make a profit."
As a member of the German Concert Promoter Association Mr. Maack said he was lobbying for laws that tax only the profit and for no taxation in cases where costs are higher than the income or when a tour breaks even.
"We are trying to tell the financial people who are responsible for the financial laws in Germany that this is not the correct way (and that) this (could) destroy many small level tours."
Double taxation
The Sunday Gleaner contacted the Taxpayer Audit and Assessment Department of the Jamaican Ministry of Finance to clarify whether local acts would be taxed twice -- in Europe and at home.
Ainsley Powell, a technical specialist in the department, noted that the laws governing the double taxation mechanism were deeper than it seemed on the surface. "There is a formula to calculate (tax) relief and the effective rate," he said. The formula allows local acts to receive a tax credit for taxes they pay overseas and the net amount they pay to the Jamaican Government.
"Income taxes are levied on anybody who earns an income that exceeds the threshold or tax-free income of $120,432," explained a representative of the tax administration department. "The tax rate is 25 per cent across the board and companies do not receive that minimum threshold," she explained.
"Normally with double tax you usually get a relief so they would be entitled to the tax relief which ensures that the person is not taxed twice," she added.
Jamaica has a double taxation treaty with several countries including France, the United Kingdom, United States, Canada, Germany, Norway, Sweden, Denmark, China as well as the CARICOM member countries of Antigua, Barbuda, Belize, Grenada, Guyana, St. Kitts/Nevis, St. Vincent and Grenadines and Trinidad & Tobago.
In cases where Jamaica does not have a double taxation agreement with a country where the income was generated, adjustments are not made to the amount of tax payable by the individuals.
