Incentives

 

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 leverages a suite of incentives to provide attractive fiscal benefits.

Fiscal incentives exist by virtue of a number of legislations related to:

  • Omnibus Fiscal Incentives
  • Special Economic Zones
  • Large Projects & Pioneer Industries
  • Group Headquarters
  • Junior Stock Exchange
  • Urban Renewal
  • Bauxite & Alumina

  

OMNIBUS FISCAL INCENTIVES

 The Omnibus Fiscal Incentives framework provides for varying levels of relief from:

  •  Customs Import Duties, normally charged when importing goods into the country
  • Additional Stamp Duties, usually applied on certain agricultural products
  • Corporate Income Tax, generally levied on the profit income of businesses. 

 No application is necessary to access the benefits under the Omnibus Incentives framework.

These benefits are granted via the following three (3) specific pieces of legislation:

1)    The Fiscal Incentives Act (FIA)

Under the FIA, companies can access a number of benefits that can reduce the corporate income tax liability. Key among these benefits include the:

30% Employment Tax Credit (ETC) that can be applied at the time at which companies file their taxes.  Companies can claim the full tax credit where they pay their statutory taxes in full and on time.  These statutory taxes are the Education Tax, NHT/NIS and HEART contributions.  Application of the ETC can effectively reduce the Corporate Income Tax (CIT) rate from 25% to as low as 17.5%.

Capital Allowance applicable to an impressive number of property referred to as “industrial buildings”, including:

  • buildings or structures used directly in the production of primary products,
  • hotels licensed by the Jamaica Tourist Board
  • hospitals and certain other health-care facilities
  • multi-story car parks
  • buildings or structures constructed under public-private partnership arrangements

The Capital allowances are applied at the point at which the companies submit their annual returns. Only companies that are fully tax compliant, i.e. taxes are paid in full and on time, will be able to benefit from the reduced CIT liability. Details on the application of these incentives can be accessed via Tax Administration Jamaica at www.Jamaicatax.gov.jm.  

Loss Carry Forwards allow companies to carry forward no more than 50% of their losses into the new year.

 

2)    The Customs Tariff (Revision) (Amendment) Resolution, 2013

The key benefit under the Revised Customs Resolution is the introduction of the Productive Inputs Relief (PIR) scheme.

The Product Input Relief allows companies to import certain items without having to pay the duty and additional stamp duty (where applicable), namely:

  •  Raw materials, intermediate goods, consumables or packaging materials and equipment (including parts) for the manufacturers
  • Machinery & capital equipment
  • A set list of goods for hotels & resort cottages and attractions
  • A set list of goods for the healthcare sector
  • Tools of Trade for the Creative Industries, including the Film and Music industries

 Companies must be registered to access PIR benefits.  Specifically,

Companies operating in the …

Register with the …

Tourism & Attraction sector

Ministry of Tourism

Manufacturing & Agriculture sectors

Ministry of Industry, Commerce, Agriculture & Fisheries

Creative Industries

Ministry of Culture, Gender, Entertainment & Sport

Health sector

Ministry of Health

 

Companies should note that the PIR only covers the import duties and the Additional Stamp Duty.   Both the Manufacturing and Agricultural companies are also eligible to receive relief from the Value Added Tax (General Consumption Tax (GCT)), while the registered manufacturers also benefit from a 50% discount on the Customs Administration Fee (CAF) and a deferment on the GCT.  Companies from the other sectors & industries are required to pay all other port charges and fees.  Key among those are the:

  • Customs Administration Fee (CAF): is a schedule of applicable fees based on the item being imported
  • Value Added Tax (General Consumption Tax (GCT)): the tax varies between two rates, i.e. 16.5% or 21.5%
  • Standards Compliance Fee (SCF): 0.3% of the CIF value of the imported item
  • Environmental Levy: 0.5% of the CIF value of the imported item
  • Special Consumption Tax (SCT): Applied to few items including alcoholic beverages, most tobacco products and some petroleum products
  • Stamp Duty: two rates are applied, i.e. J$5.00 and J$100.00 depending of the CIF value of the imported item.

 

3)    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.

SPECIAL ECONOMIC ZONES ACT

A Special Economic Zone (SEZ) is a designated geographical area in which approved economic activities are undertaken.  Approved SEZ Developers or Occupants benefit from a range of fiscal incentives, including:

  • Duty-free importation
  • Value Added Tax (General Consumption Tax (GCT)) free importation
  • Lower CIT rate of 12.5% (half of the standard rate)
  • 10% Promotional Tax Credit (PTC)- for training and R&D
  • 30% Employment Tax Credit (ETC)
  • Witholding Tax exemptions

Other non-fiscal incentives include expedited business services.

The SEZ regime does not allow for operations in the following: extractive industries, telecommunications, financial services, catering, retail trade, health services (excluding R&D), construction services, public utilities, real estate and property management and tourism services.

 

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. 

Greater details on the benefits and its application will be provided upon the finalisation of the regulations for the Act.

 

INCOME TAX ACT (AMENDMENT), 2012 - GROUP HEADQUARTERS INCENTIVES

Companies interested to establish group head offices within Jamaica will benefit from the exemption of the requirement to charge and pay over the Personal Income Tax (PIT) for all its expatriate employees.

Such companies must employ no less than 30% Jamaicans in its operations and carry out the (i) supervision, management/monitoring or its operations; (ii) accounting, data processing, engineering and other technical support; (iii) centralized treasury management and funding activities; as well as (iv) other activities that may be gazetted by the Minister of Finance.

  

INCOME TAX ACT (Junior Stock Exchange)

Companies listed on the Junior Stock Exchange will be exempted from:

  • 100% of the CIT in the first five (5) years from the date of admission to the Junior Market.
  • 50% of the CIT in the following five (5) years.

  

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.

 

BAUXITE AND ALUMINA INDUSTRIES (ENCOURAGEMENT) ACT

  • Recognized Bauxite & Alumina Producers can import all productive inputs free from:
    • import duties
    • Value Added Tax (General Consumption Tax (GCT))
    • All other port related taxes and charges.
  • These Recognized Producers also automatically qualified for import duty concessions on lubricating oils, grease and other such related chemicals, except petrol.
  • Applications are made the Jamaica Bauxite Institute