The Government of Jamaica has embarked on a comprehensive tax reform process that has resulted in a simplified and more streamlined system of granting fiscal incentives starting in 2014. One significant and new feature of this reform is the establishment an attractive suite of legislation, known collectively as the Omnibus Incentives. This new regime is designed to create a transparent and automatic fiscal incentive framework, where eligibility is not based on sector alignment but on rather on productive activity. Developed on a more streamlined administrative system, the Omnibus Incentives legislation creates a framework through which companies operating in Jamaica benefit from performance-based fiscal primarily designed to reduce the cost of importation and the level of corporate income tax.
Altogether, Jamaica now boasts a modern and responsive legislative and administrative fiscal incentive system that has created a business environment that is built on greater efficiencies, effectiveness and productivity.
While enjoying a number of key natural advantages such as a cost competitive and talented labour pool, strategic geographic location, first world telecoms infrastructure and great physical infrastructure , the government has continued in its efforts to simplify and enhance the environment for doing business in Jamaica. To this end, the government recently implemented a very comprehensive set of incentives under the Omnibus legislation framework. In addition to the Omnibus Leglislation, other incentives are noted below:
OMNIBUS INCENTIVES
This new omnibus fiscal incentives framework provides for varying levels of relief in respect of customs duties, additional stamp duties and corporate income tax. These benefits are granted via the following four (4) specific components:
The Fiscal Incentives Act
This is targeted at small and medium size businesses and provides for the reduction of the effective corporate income tax rate by applying:
- An Employment Tax Credit (ETC) at a maximum value of 30%
- A Capital Allowance applicable to a broadened definition of industrial buildings
The Income Tax Relief (Large-Scale Projects and Pioneer Industries) Act
This is targeted at large-scale projects and/or pioneering projects and provides for an improved and more attractive rate for the Employers’ Tax Credit (ETC). Projects to be designated either as large-scale or pioneer will be based on the decision of Parliament having been informed by an Economic Impact Assessment.
Revised Customs Tariff
This is targeted at the productive sectors and provides for the 0% duty on capital equipment and raw material. Persons in Manufacturing, Tourism and Creative industries stand to benefit from duty free importation of industry-related consumer goods.
Revised Stamp Duty Act
This is targeted at the manufacturing sector and provides exemption from additional stamp duty on raw materials and non-consumer goods.
JAMAICA FREE ZONE ACT
Companies designated with the Free Zone status are permitted to import items free of customs duty, value-added tax (called the General Consumption Tax – GCT) and other port related taxes and charges for an indeterminate period. Profits earned are also free from income tax for an indeterminate period. Eligibility is dependent primarily on the exportation of 85% of the goods and services produced within the Free Zone. This Act is slated to be repealed in 2015 at which time a new fiscal incentive arrangement will be put in place.
URBAN RENEWAL ACT
Companies that undertake development within the designated Special Development Areas benefit from Urban Renewal Bonds, a 33.3% investment tax credit, tax free rental income and the exemption from transfer tax and stamp duties on the ‘improved’ property.
INCOME TAX ACT (Junior Stock Exchange)
As of January 1, 2014, companies listed on the junior stock exchange will not be required to pay income tax in the first five (5) years. A company listing after January 1, 2017 will be ineligible for this incentive.
BAUXITE AND ALUMINA ACT
Recognized Bauxite & Alumina Producers are permitted to import all productive inputs free of import duties, GCT and other port related taxes and charges.
FOR FURTHER INFORMATION PLEASE CONTACT: Dawkins Brown /Email:dbrown@dawgen.com/Tel:1876-9084007
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