G L O B A L

Jamaica
Article Courtesy of:

Dawkins Brown
Dawgen Global
47-49 Trinidad Terrace

TAX GUIDE
Kingston 5
Jamaica

Tel 876 926 5210

Fax 876 929 1300
 G L O B A L

CONTENT
International Tax: Jamaica highlight 2018

• Tax Administration in Jamaica

• Recent Tax Changes in Jamaica
• Overview of Jamaica Tax Types
• Jamaica Tax Guide for Individuals
• Jamaica Tax Guide for Companies
• Tax credits and incentives
 G L O B A L

OVERVIEW OF JAMAICA Taxable Period

TAX ADMINISTRATION A corporation is subject to tax on its income for a

International Tax: Jamaica highlight 2018

calendar year. However, where the Commissioner

AND RULES General, TAJ is satisfied that a corporation normally
prepares financial statements to a date other than 31
Jamaica has established the following departments to December, the company may be permitted to use the
handle tax administration: profits of its own financial year rather than the calen-
Tax Administration Jamaica (TAJ) operates as a
dar year as the basis of assessment. The basis period
revenue authority (reporting to the Ministry of
Finance) whose functions include compliance and tax should not exceed 12 months; however, a company
collection, administrative and legal support, audit wishing to file its income tax return for a period
and assessment of income tax, general consumption exceeding this period must obtain the approval of
tax, stamp duty, and transfer tax. The Commissioner
General, TAJ has responsibility for the direction, TAJ.
supervision, and administration of TAJ and is support-
ed in undertaking this role by several Deputy Com- Tax Returns
missioner Generals.
The Revenue Appeals Division of the Ministry of
Finance processes appeals to decisions made by TAJ. Taxable income is calculated as net profit before tax,
The Jamaica Customs Agency has the powers of an adjusted for nondeductible expenses and allowable
executive agency and has responsibility for adminis- deductions. There is also a zero-rated income tax
tering taxes at the ports of entry as well as trade
facilitation. regime on resident corporations in the country. The
There is also a Financial Investigations Division in the table summarizes below summarizes this.
Ministry of Finance, which investigates customs
breaches and fraudulent acts in respect of tax legisla-
tion.
 G L O B A L

Payment of tax Tax assessments and audits

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Tax is payable in quarterly installments on the 15th The Commissioner General, TAJ is empowered to conduct
day of March, June, September, and December audits on selected tax returns or to assess a
of each tax year. taxpayer for additional tax at any time prior to
Quarterly installments are based on an estimate of the expiration of the statute of limitation,
the year's liability or the actual tax payable for the which is six years, except in certain cases.
previous year. The balance of income tax payable for Tax audits can be carried out whether or
a taxation year, after deduction of the not notices of assessment have been issued. Tax
installments of estimated tax, is due on 15 March of assessments may be raised where the Commissioner
the following year. Interest is charged on unpaid tax General, TAJ is of the opinion that a taxpayer has been
at a rate of 16.62% per annum while the amount assessed for less tax than the taxpayer ought to have
remains unpaid. A penalty of up to 50% may also be been charged, or where the taxpayer failed to file
imposed if TAJ issues an assessment. a tax return.
TAJ has implemented an electronic tax system that
taxpayers are required to use to file various tax
returns and remit taxes online.
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New income tax treaties Jamaica (TAJ) also filed Jamaica’s list of notifications
In January 2018, Jamaica signed an income tax and reservations in relation to the Multilateral Instrument
treaty in Kingston with Italy. This is the first tax treaty (MLI). The next step will be for Jamaica to ratify this
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between the two countries. This follows the multilateral treaty and lodge instruments of ratification
ratification by Mexico of its income tax treaty with with the OECD. This is expected to take place later this
Jamaica in December 2017. Both treaties are now in year.
force. The OECD has been spearheading the implementation of
These two treaties brings to 14 the number of an inclusive framework by over 100 OECD and
bilateral double taxation treaties (DTTs) that have non-OECD jurisdictions to tackle BEPS tax avoidance
been entered into by Jamaica to date in addition to strategies.
the multilateral Caribbean Community (CARICOM)
tax treaty, which covers a further ten Caribbean Tax provisions for share buy-backs
jurisdictions within the CARICOM Community.
The Companies Act provides various mechanisms where-
Organisation for Economic Co-operation and by a company may either redeem or purchase its own
Development (OECD) Multilateral Tax shares subject to meeting the various conditions and
Convention requirements stipulated. Notwithstanding this, there were
no complementary provisions in Jamaican tax law, and
In January 2018, Jamaica signed the OECD Base this adversely impacted the capacity of companies to
Erosion and Profit Shifting (BEPS) Multilateral implement such transactions without triggering onerous
Convention. Upon signature, Tax Administration tax liabilities.
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Recognising the merits of facilitating companies in

undertaking share redemptions and buy-backs, the
government recently amended the relevant tax laws
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to accommodate the redemption or purchase by a

company of its own shares that are listed on a
recognised stock exchange without triggering
adverse tax consequences.

Introduction of Special Economic Zone (SEZ)

regulations

The Special Economic Zones Act, 2016 provides for

the development, regulation, construction, supervi-
sion, management, and control of SEZs in Jamaica.
The Regulations to support the SEZ regime were
passed in 2017.
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Overview of Jamaica Tax Types Where services are imported from a supplier who is not
resident in Jamaica, the recipient of those services is
General consumption tax (GCT) deemed to be liable to account for GCT on the services.
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The recipient may be able to claim a credit for GCT

GCT is a value-added tax (VAT) imposed on the incurred on imported services in certain circumstances; in
supply of goods or services within Jamaica (above a particular, there are specific conditions where such
minimum turnover threshold) and on the import of services are received from overseas connected parties.
goods or services to Jamaica. The standard rate is The list of items exempt from GCT includes a range of
currently 16.5%. Higher or lower rates of GCT are basic food items, prescription drugs, certain medical
applicable to certain goods and services; for exam - supplies, as well as certain construction, transportation,
ple, the provision of telephone services (including and financial and insurance services. Zero-rated goods
phone cards) and handsets is subject to GCT at the and services include certain agricultural and fisheries
rate of 25%, while the tax is imposed on hotels and inputs, exported goods and services, and purchases by
other businesses in the tourism sector at an effective diplomatic and international organisations and foreign
rate of approximately 10%. Operators within the governments.
tourism industry who were granted approval under A GCT group accounting mechanism is available, where-
legacy tourism incentives and who have not elected by two or more affiliated entities may be approved by
to move to the current regime cannot benefit from the Commissioner General, TAJ to be treated as a single
the 10% tourism GCT rate. taxpayer for GCT purposes.
Subject to certain exceptions, an additional 5%
advance GCT is levied on the commercial importa-
tion of goods by a GCT-registered taxpayer.
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Customs duties and related imposts Special consumption tax (SCT)

Customs duty is levied on the customs value of goods SCT is imposed at various rates on the importation or
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imported, which is determined in accordance with local manufacture of “prescribed goods” (i.e. certain
the World Trade Organization (WTO) rules on petroleum products, ethanol, alcoholic drinks, tobacco,
customs valuation. and motor vehicles).
The rates are specified by a prescribed Customs
Tariff, having regard (where appropriate) to the Property tax
Common External Tariff agreed between CARICOM All land in Jamaica is valued for property tax purposes
member states. on the 'site value' or 'unimproved value' (as reflected on
In addition to normal customs duties, an environmen- the 2013 Property Valuation Roll). Property tax is levied
tal protection levy (EPL) and a standards compliance by reference to various value bands at a scale of rates
fee (SCF) are imposed at the rate of 0.5% and ranging from 0.50% to 0.90%.
0.3%, respectively, of the customs value of goods
imported. The EPL is also imposed on 75% of the Transfer tax
sales value of locally manufactured goods with an A transfer tax of 5% is applicable on the consideration
input tax credit available for any EPL paid in respect payable (or market value in certain instances) on the
of imported productive inputs. Customs administra- transfer of land, buildings, securities, and shares (provid-
tion fees (CAF) are charged based on the service(s) ed that a refund is available where the transfer tax
provided by Jamaica Customs. Other import levies charged exceeds 37.5% of the capital gain made).
apply in certain instances, such as additional stamp Transactions on the Jamaica Stock Exchange (JSE) are
duty (ASD) on certain goods. exempt from transfer tax, as are the transfer of regis-
tered corporate bonds, whether or not the company is
listed on the JSE.
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Stamp Duty Minimum Business Tax

Stamp duty is imposed on a wide variety of legal An MBT of JMD 60,000 per annum is levied on all
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instruments. The rate of stamp duty depends on the corporate bodies incorporated or registered under the
legal instrument involved. Stamp duty is imposed, for Companies Act, the Building Societies Act, the Friendly
example, on the conveyance on sale of real estate Societies Act, or the Industrial & Provident Societies Act,
and certain other assets at 4%, while transfers of as well as on individuals carrying on a trade, profession,
shares in Jamaican companies attract a rate of 1%. or business whose chargeable income (less emoluments
Transfers of shares on the JSE are exempt from and an amount equivalent to the annual tax-free thresh
-
stamp duty, as are the transfer of registered corpo- old) exceeds JMD 3 million per annum.
rate bonds, whether or not the company is listed on The MBT is payable in two tranches and is creditable
the JSE. Stamp duty is also imposed at an ad valor- against the taxpayer’s income tax liability for the year of
em rate on the creation or increase of a mortgage. assessment.
In general, Jamaican residents and domiciled individ- In the case of an individual taxpayer, any MBT paid in
uals are taxed on their worldwide income, while excess of income tax liability for the year of assessment
non-resident individuals are taxed on Jamai- may be refunded or carried forward. Companies, how-
can-sourced income. A non-Jamaican domiciled ever, are not entitled to a refund or carryforward of
individual is generally not taxable on excess MBT.
foreign-sourced income unless one remits this to
Jamaica. Notwithstanding this, a non-domiciled
individual working in Jamaica is taxed on the com-
pensation attributable to services rendered in and in
relation to Jamaica (subject to certain exceptions) as
well as Jamaican-sourced income.
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Asset Tax which the payment is made. The levy paid is allowable
as a credit against the income tax liability of the contrac-
An ad valorem asset tax at the rate of 0.25% is tor in the year of assessment in which the levy is deduct-
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imposed on the ‘taxable value’ of the assets of ed. To the extent that there is any excess, it is not refund-
deposit-taking institutions regulated by the Bank of able.
Jamaica, as well as securities dealers, life assurance
companies, and property and casualty insurance Guest accommodation room tax (GART)
companies regulated by the Financial Services Com-
mission. The taxable value of assets is broadly deter- GART is levied at a specific rate on hotels and other
mined as the value of assets on the balance sheet tourist accommodation facilities based on room occupan-
with adjustments for certain items specific to each cy. GART is tiered depending on the number of rooms at
type of institution. the hotel or other tourism accommodation facility.
For other entities, asset tax is imposed at a fixed rate
ranging from JMD 5,000 to JMD 200,000, depend- Telephone call tax
ing on the aggregate value of the entity’s assets, and Tax is imposed on telephone calls, including inbound
is payable on or before 15 March annually. calls terminating on fixed or mobile networks.

Contractors levy

Payments to contractors (including sub-contractors) in

respect of construction, haulage, and tillage opera-
tions are liable to a withholding of a contractors levy
of 2% of the gross amount paid. This must be remit-
ted to TAJ within 14 days of the end of the month in
 G L O B A L

Jamaica Tax Guide Payment of tax

for Individuals
Tax is payable in quarterly installments on the 15th day
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Taxable Period of March, June, September, and December of each tax

year. Quarterly installments are based on an estimate of
An individual is subject to tax on one’s income for a the year's liability or the actual tax payable for the
calendar year; however, a taxpayer may obtain the previous year. The balance of income tax payable for a
approval of the Commissioner General, TAJ to file taxation year, after deduction of the installments of
on a fiscal-year basis. estimated tax, is due on 15 March of the following year.
Interest is charged on unpaid tax at a rate of 16.62%
Tax returns per annum while the amount remains unpaid. A penalty
of up to 50% may also be imposed if TAJ issues an
Income tax returns are due for filing on 15 March in
assessment.
the year following the year of assessment and are
based on a system of self-assessment of the tax
Income tax (PAYE) is withheld from emoluments; howev-
payable. However, an individual who expects that
er, where withholding is not possible (e.g. because the
income tax will be payable by one’s self only in
employer is not resident in Jamaica), the taxpayer will
respect of emoluments is not required to file an
be required to make payment of estimated tax in quar-
income tax return.
terly installments.
Husbands and wives generally file separately and
must elect in writing to be jointly assessed.
 G L O B A L

Tax assessments and audits Local income taxes

The Commissioner General is empowered to conduct Tax is imposed on individuals at the national level.
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audits on selected tax returns or to assess a taxpay- Income tax is not separately imposed at the local level.
er for additional tax at any time prior to the expira -
tion of the statute of limitation, which is six years, Payroll taxes
except in certain cases. Tax audits can be carried
out whether or not notices of assessment have been Payroll taxes are imposed at the national level on emolu-
issued. Tax assessments may be raised where the ments paid by employers to their employees, including
Commissioner General is of the opinion that a (subject to certain conditions) expatriates who undertake
taxpayer has been assessed for less tax than one work in Jamaica. The taxes comprise Pay-As-You-Earn
ought to have been charged, or where the taxpayer (PAYE) Income Tax, Education Tax, and contributions to
failed to file a tax return. the National Housing Trust (NHT), the National Insur-
ance Scheme (NIS), and the Human Employment and
Personal income tax rates Resource Training (HEART) Trust.

Individuals are generally liable to income tax at a Employers are obligated to deduct and remit payroll
rate of 25% on income in excess of the annual taxes within 14 days after the end of the month in which
tax-free threshold. However, individuals with income the emoluments are paid. Employers and employees
exceeding 6 million Jamaican dollars (JMD) per contribute at the following rates:
annum are subject to income tax at a rate of 30%.
With effect from 1 April 2017, the nil-rate threshold
is JMD 1.5 million.
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Employee Employer
Payroll tax Basis
rate (%) rate (%)
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Taxable emoluments up to 6
million Jamaican dollars
25.00 N/A
(JMD) per annum less the annual
PAYE Income
Tax tax-free threshold

Taxable emoluments in excess of

30.00 N/A
JMD 6 million per annum

Education Tax Taxable emoluments 2.25 3.50

NHT
Gross emoluments 2.00 3.00
contributions
Gross emoluments up to a
NIS
maximum of JMD 1.5 2.50 2.50
contributions
million per annum
HEART
Grossemoluments N/A 3.00
contributions
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Individual - Residence Benefits provided to employees, whether in cash or kind,

are taxable. The taxable benefit arising from the private
Individuals are treated as being resident in Jamaica use of a company car ranges from JMD 30,000 to JMD
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for a tax year (being the calendar year) if they 140,000 per annum and is determined by reference to
satisfy any of one of several conditions: the cost, the age, and the relative percentage of private
•They spend at least six months in Jamaica in the use.
tax year or visit Jamaica with the intention of estab- Reimbursement of excess tax paid over the tax that
lishing tax residence and actually do so. would be chargeable on the same amount of income in
•They (or their spouses) have a place of abode the recipient's home country (tax equalisation) is exempt
available for their use in Jamaica, and they visit the from tax.
island at any time during the tax year, no matter Housing accommodation benefit
how short the stay. Housing accommodation provided to an employee by
•They habitually visit Jamaica for substantial peri- an employer is a taxable benefit. The taxable value of
ods. The Commissioner General, Tax Administration benefit varies, subject to certain conditions being met.
Jamaica (TAJ) generally regards periods totalling Uniform and other non-cash benefits
three months as substantial and visits occurring in The charge to income tax in respect of uniform and other
four consecutive years as habitual. non-cash benefits is to be determined by reference to the
full cost of providing the uniform and other benefits in
Employment income kind. Previously, the Income Tax Act did not prescribe a
basis for the valuation of non-cash benefits derived by
An individual who is resident but not domiciled in employees, with certain exceptions (e.g. the provision of
Jamaica is taxed on the emoluments (salary, living accommodation benefit, company cars, or preferential
allowances, benefits in kind, use of company cars, loans by specified financial institutions). Nominal tax-free
etc.) received for work done for or relating to Jamai - allowances of up to JMD 5,739 per annum in respect of
ca, regardless of where payment is made and the provision of uniforms and JMD 3,395 per annum in
regardless of whether the emoluments are remitted respect of laundry still apply for specified categories of
to Jamaica. workers.
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Capital gains and investment income recipient is an individual. Dividends paid to non-resident
shareholders are subject to income tax thereon at the
An individual who is resident but not domiciled in default rate of 25% in the case of an individual (subject
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Jamaica is taxed in Jamaica on investment income to any treaty protection or incentive relief available).
arising outside of Jamaica to the extent that the Subject to certain conditions being met, a company may
income is remitted to Jamaica. claim an income tax deduction in respect of preference
Capital gains dividends paid during the year of assessment. However,
There is no tax on capital gains in Jamaica. There is, to the extent that these preference dividends do not
however, a transfer tax on the market value of qualify for this income tax deduction, they will be treated
certain assets transferred and stamp duty payable in the manner indicated above.
on the transfer/disposal of shares or real property.
Interest income
Dividend income
Income tax at the rate of 25% is deducted at source
Ordinary dividends paid by Jamaican tax-resident from gross interest paid to Jamaican residents (i.e. indi-
companies to Jamaican tax-resident shareholders are viduals and companies) by a ‘prescribed person’.
liable to tax at the rate of 15%. The tax is to be Prescribed persons include commercial banks and other
deducted on payment by the distributing company financial institutions.
and represents the final tax on such dividends. Addi- Interest paid by a resident person to a non-resident
tionally, the dividend income on which tax is pay- individual is subject to withholding tax (WHT) of 25%
able may not be offset by tax losses, and expenses (unless a lower rate of withholding is applicable by
incurred to earn the dividend are no longer deduct- virtue of tax treaty protection available).
ible in arriving at chargeable income.
Preference dividends that qualify as tax deductible
expenses of the paying company (see below) contin-
ue to be liable to tax at a rate of 25% where the
 G L O B A L

Jamaica Tax Guide

for Companies
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Corporate - Taxes on corporate income

A resident corporation is taxable on its worldwide income. Non-resident companies are subject to tax
on Jamaican-sourced income. Tax is imposed on certain sources of income, such as interest, dividends,
royalties, and fees, by way of withholding at a rate of 33% for non-resident corporations. Lower rates
of withholding are possible, provided that the recipient is resident in a country that has concluded a DTT
with Jamaica.
The current rates of corporate income tax (CIT) are as follows:

The income of certain organisations

CIT rate
Classification Definition is specifically exempt from income
(%)
tax. These include pension and
A company that is regulated by the Bank of Jamaica (other
Regulated than building societies), the Financial Services Commission superannuation funds and
33
company (other than life assurance companie s), the Office of Utilities charitable organisations that are
Regulation, or the ministry with responsibility for finance.
approved by the Commissioner
Building society An entity similar to a savings and loan association. 30 General, TAJ.

Life assurance
25
companies
Unregulated A company (that is not a regulated company) registered and
25
company operating within Jamaica.
 G L O B A L

Local income taxes 2% on all taxable emoluments received from employ -

ment in Jamaica. Self-employed persons also contribute
Income tax is imposed at the national level. Income at a rate of 2% of earnings. An employer's contribution
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tax is not separately imposed at the local level. is tax deductible but that of an employee is not. Employ-
ee’s contributions are refunded after seven years, and
Social security contributions an employer's contribution is not refundable.
Expatriate employees, on application, are entitled to a
Employers are obligated to deduct and remit the refund of their contributions when they leave the island
following contributions, in addition to permanently.
Pay-As-You-Earn (PAYE) Income Tax applicable to Education Tax
employees, by the 14th day of the month following Education Tax is charged at the rates of 3.5% for
the month of deduction. employers and 2.25% for employees after the deduction
National insurance scheme (NIS) contributions of NIS contributions and contributions to an approved
Employees and self-employed persons are required superannuation scheme. Only the employer's contribu-
to be insured under a state-administered programme tions are tax deductible, and the amounts paid are not
of social security insurance. Employees and self-em- refundable to either the employer or the employee.
ployed persons contribute at a rate of 2.5% on a Human Employment and Resource Training (HEART)
maximum remuneration/earnings of JMD 1.5 million. contributions
Employers also contribute at a rate of 2.5% on a HEART contributions are payable monthly by employers
maximum remuneration of JMD 1.5 million. NIS only, at the rate of 3% of the wage bill. The contribu-
contributions are tax deductible. tions are tax deductible.
National housing trust (NHT) contributions
NHT contributions are made by employers at the
rate of 3% while employees contribute at the rate of
 G L O B A L

Consumption taxes bonds, whether or not the company is listed on the JSE.
There is no inheritance tax or capital gains tax regime in
General consumption tax (GCT) Jamaica.
GCT is a value-added tax (VAT), and the standard rate Stamp duty
is currently 16.5%. Higher or lower rates of GCT are
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There is stamp duty of 1% payable on the transfer/disposal

applicable to certain goods and services. of shares and 4% for real property sold/transferred. Trans-
See the Other taxessection in the Corporate tax sum- actions on the JSE are exempt from stamp duty, as are the
mary for more information. transfer of registered corporate bonds, whether or not the
Special consumption tax (SCT) company is listed on the JSE. Stamp duty is also imposed at
SCT is imposed at various rates on the importation or a nominal rate of JMD 100 on instruments effecting a
manufacture of ‘prescribed goods’ (certain petroleum refinancing of an existing mortgage. Where, however, the
products, ethanol, alcoholic drinks, tobacco, and motor mortgage is increased, the normal ad valorem stamp duty
vehicles). rates shall apply to the amount by which the mortgage is
Property tax increased.
All land in Jamaica is valued for property tax purposes Minimum business tax (MBT)
on the 'site value' or 'unimproved value' (as reflected An MBT of JMD 60,000 per annum is levied on all corpo -
on the 2013 Property Valuation Roll. Property tax is rate bodies, as well as on individuals carrying on a trade,
levied by reference to various value bands at a scale profession, or business whose chargeable income (less
of rates ranging from 0.50% to 0.90%. emoluments and an amount equivalent to the annual
Transfer tax tax-free threshold) exceeds JMD 3 million per annum.
A transfer tax of 5% is applicable on the consideration The MBT is payable in two tranches: JMD 30,000 on 15
payable (or market value in certain instances) on the June and 15 September of the year of assessment to which
transfer of land, buildings, securities, and shares (pro- it relates. The MBT is creditable against the taxpayer’s
vided that a refund is available where the transfer tax income tax liability for the year of assessment.
charged exceeds 37.5% of the capital gain made). In the case of an individual taxpayer, any MBT paid in
Transactions on the Jamaica Stock Exchange (JSE) excess of income tax liability for the year of assessment
(including the Junior Stock Exchange) are exempt from may be refunded or carried forward.
transfer tax, as are the transfer of registered corporate
 G L O B A L

Employment tax credit (ETC)

The ETC is a non-refundable tax credit that is avail-

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able to tax-compliant employers, including individu-

als, in computing their income tax liability.
ETC is capped at 30% of the income tax payable on
profits from business operations. With a headline
income tax rate of 25%, the tax credit therefore
provides tax-compliant individuals with an opportuni-
ty to reduce the effective income tax rate on their
trading profits to as low as 17.5%.
The ETC may not be claimed against any income tax
chargeable on non-trading income (e.g. passive
investment income) nor can it be claimed in the year
of assessment where the taxpayer incurred a tax loss
on business operations. The amount must be utilised
in the year that the statutory payments are made.
Unutilised amounts are not available to be carried
forward or back to be utilised in the other years of
assessment.

Foreign tax relief and tax

Foreign tax paid on income that is not taxed in

Jamaica is not available as a credit against the
individual's Jamaican tax liability.
 G L O B A L

Tax treaties

Jamaica over the years has signed several

Tax Treaties.
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WHT is required to be deducted from

chargeable payments made to non-residents
and remitted to TAJ (along with the applica-
ble return) within 14 days of the end of the
month in which the payment is made in
order to avoid the imposition of interest and
penalties.
Subject to securing approval from TAJ
(where appropriate), the following rates of
WHT apply to the categories of payments
highlighted (this is not an exhaustive list):
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G L O B A L
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G L O B A L
 G L O B A L

Notes 7.Rate reduced further if received

by a bank recognised as a banking institution
1.Substantial holdings refer to resident companies under the laws of that state.
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that hold 25% or more of the voting rights of the 8.Comes into effect for WHT from 1 January
paying Jamaican resident company. 2019.

2.Tax is withheld at the rate of 15% where a divi- 9.Provided the services are rendered outside of
dend is paid by a company resident in Jamaica to a Jamaica or if in Jamaica (within a prescribed
resident individual shareholder, regardless of share- period).
holding.

3.Tax is deducted from interest paid to Jamaican

WHT is also imposed at the rate of 15%
residents if payment is made by a prescribed person.
on insurance premiums paid by Jamaican
4.Provided the income is not effectively connected
residents to non-residents (subject to
with a PE in Jamaica.
certain exceptions and protection under a
tax treaty). WHT of 3% is imposed on
5.Applies only to companies owning a substantial payments in respect of ‘specified services’
holding (percentage ownership as prescribed by the purchased locally (above a de
treaty). minimis amount of JMD 50,000 per
invoice).
6.Rates apply only to residents of member states that
WHT withheld should be available for
have ratified the tax treaty.
offset against the payee’s income tax
liability on the filing of returns.
 G L O B A L

Tax credits and incentives available to Com - available to a developer or occupant under the SEZ Act
panies in Jamaica include relief from asset tax and a reduced rate of
income tax, property tax, transfer tax, GCT, and customs
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duty. However, these incentives are not available to

Jamaica grants relief from taxation to companies developers or occupants who are eligible for relief
who have been approved under the following incen- under a number of other enactments.
tive legislation: A number of industries/business activities are specifically
prohibited in the SEZ, including (but not limited to)
•The Special Economic Zones (SEZ) Act. mining or quarrying for natural resources, services
•The Urban Renewal (Tax Relief) Act. pertaining to tourism, telecommunications, public utilities,
•The Income Tax Act (Junior Stock Market Compa- financial services, construction, real estate, and property
nies). management.
•The Income Tax Relief (Large-Scale Projects & The Urban Renewal (Tax Relief) Act
Pioneer Industries) Act. The Urban Renewal (Tax Relief) Act provides tax incen-
•The Bauxite and Alumina Industries (Encourage- tives to persons approved under the Act in connection
ment) Act. with undertaking programmes of development in areas
•The Charitable Organizations (Tax Harmonization) designated as special development areas, with a view to
(Miscellaneous Provisions) Act. improving or restoring them. The tax incentive provides
Special Economic Zones (SEZ) certain tax benefits, including relief from income tax on
The Special Economic Zones (SEZ) Act was passed rental income and interest earned by an investor in an
in January 2016 and repealed the Jamaica Export Urban Renewal Bond. There is also exemption from
Free Zones Act. It has established a regime to stamp duty and transfer tax on the transfers of property.
support the designation, promotion, development, A tax credit based on expenditure incurred on capital
operation, and management of SEZs. improvement works in a designated special development
A person may be declared to be a ‘developer’ or area is also available. In addition, lessees of the
‘occupant’ under the SEZ Act. Tax incentives that are improved properties, who satisfy certain criteria, are
able to claim a tax deduction of double the rental paid.
 G L O B A L

The Income Tax Act (Junior Stock Market Companies) Incentives for large-scale
projects/pioneer industries
Subject to certain conditions being met, a company
The Income Tax Relief (Large-Scale Projects & Pioneer
listed on the Junior Market of the JSE is eligible for full
Industries) Act is designed to encourage innovation and
exemption from income tax on their profits in the first
high-value investments. It provides a mechanism through
five years from the date of admission to the Junior
which additional income tax incentives can be offered in
International Tax: Jamaica highlight 2018

Market, with a 50% exemption from income tax on

circumstances where the Minister of Finance designates
their profits in next following five years.
(subject to affirmative resolution in Parliament) a project as
Employment tax credit (ETC)
an approved large-scale project or an economic activity as
The ETC is comprised of a non-refundable tax credit
an approved pioneer industry.
that is available to employers in computing their
Participants in either a designated large-scale project or a
income tax liability. A number of taxpayers are ineligi -
pioneer industry may subsequently be approved by Minis -
ble to claim this tax credit.
terial Order, which will stipulate the extent of relief grant -
The ETC is computed by reference to payroll taxes
ed. The income tax relieved under all orders issued pursu-
(excluding PAYE income tax) filed and remitted by
ant to this mechanism in any year will be capped at 0.25%
their due date by the employer, subject to an overall
of the country’s gross domestic product (GDP) for the
cap. With a headline income tax rate of 25%, the ETC
previous financial year.
therefore provides tax-compliant employers with an
Productive inputs relief (PIR)
opportunity to reduce the effective income tax rate on
There is relief from customs duty and additional stamp duty
their trading profits to as low as 17.5%.
on the importation of certain ‘productive inputs’ that are
Where a company makes a distribution (dividends and
directly used in the ‘production of primary products’ or the
certain other benefits to shareholders), the credit is
‘manufacture of goods’. In addition to the manufacturing
clawed back by TAJ to the extent of 10% of the distri-
and agricultural sectors, relief is also granted on certain
bution, less the tax payable by the recipient of the
products imported for use in the tourism, creative arts, and
distribution (i.e. the ETC clawback only applies where
healthcare industries.
tax imposed on the recipient of the distribution is less
The relief is subject to the proviso that imported items are
than 10%). The credit clawed back must be repaid to
not available in adequate supplies from a local manufac -
TAJ within 14 days of the end of the month in which
turer or from a manufacturer within the CARICOM
the distribution is made.
Common Market area or are not otherwise prohibited from
benefitting from this relief.
 G L O B A L

Bauxite and Alumina Industries (Encourage - designated in foreign currency or Jamaican dollars.
ment) Act Employee Share Ownership Plan (ESOP)
A person engaged in mining bauxite and producing Certain tax benefits accrue to employees and employers
alumina in Jamaica may be approved as a in respect of contributions to an approved ESOP as well
recognised bauxite producer or a recognised alumi- as the allocation of shares from such plans.
International Tax: Jamaica highlight 2018

na producer (or both) and obtain the following tax

reliefs: Foreign tax credit
Relief from customs duty, additional stamp
duty, and GCT in respect of the importation of plant, The avoidance of double taxation is achieved by means
machinery, trucks and other vehicles, and other of foreign tax credits available under most tax treaties or
specified material and equipment that are necessary by means of exemption in the case of the CARICOM
for the winning, treatment, and transportation in treaty. Under the provisions of the Income Tax Act, a
Jamaica and shipping of bauxite and alumina. foreign tax credit is also available to companies in
Relief from customs duty or other similar Jamaica that have paid or are liable to Commonwealth
impost on the importation of certain petroleum fuels Income Tax. Where recourse cannot be had through
and oils (excluding petrol) during the concession either of these methods, by convention, in practice,
period. partial relief by way of expense deduction is granted
Tax incentives for charitable organisations against income for the foreign tax.
The Charities Act provides a mechanism for regis- Group taxation is generally not permitted in Jamaica,
tered charitable organisations to obtain exemption with the exception of a mechanism to permit group filing
from income tax, customs duty, , property tax, of returns for GCT purposes.
stamp duty, and transfer tax.

Non-resident deposits

Non-residents who place deposits with Jamaican

banks can earn interest free of Jamaican tax in
certain circumstances. The deposits may be
 G L O B A L

Transfer pricing an unconnected person located in a low-tax jurisdiction

to be a connected person under certain circumstances.
Jamaica has implemented a transfer pricing regime
International Tax: Jamaica highlight 2018

consistent with the OECD’s guidelines on transfer Thin capitalisation

pricing for multinationals in an effort to protect its tax
base and address issues of tax avoidance, particu- There are no provisions for thin capitalisation in the tax
larly in relation to cross-border transactions. Detailed laws of Jamaica. It has been proposed, however, that
transfer pricing rules seek to ensure that taxpayers such provisions should be introduced in the future.
compute their taxable income using a deemed
arms-length consideration (determined in accordance Controlled foreign companies (CFCs)
with prescribed methodologies) for all transactions
between connected parties (where different to the There is no CFC regime in Jamaica.
actual consideration involved).

All taxpayers who engage in such transactions are

required to disclose information pertaining to the
identity of connected persons, particulars, and pric-
ing arrangements of such transactions primarily
through the annual income tax return and to retain
this documentation in support of the income tax
return. Business entities with gross annual revenues
of JMD 500 million or more are required to comply
with extensive OECD standard transfer pricing docu-
mentation requirements.

The rules also empower the tax authorities to deem

 G L O B A L

Capital gains and investment income recipient is an individual. Dividends paid to non-resident
shareholders are subject to income tax thereon at the
An individual who is resident but not domiciled in default rate of 25% in the case of an individual (subject
International Tax: Jamaica highlight 2018

Jamaica is taxed in Jamaica on investment income to any treaty protection or incentive relief available).
arising outside of Jamaica to the extent that the Subject to certain conditions being met, a company may
income is remitted to Jamaica. claim an income tax deduction in respect of preference
Capital gains dividends paid during the year of assessment. However,
There is no tax on capital gains in Jamaica. There is, to the extent that these preference dividends do not
however, a transfer tax on the market value of qualify for this income tax deduction, they will be treated
certain assets transferred and stamp duty payable in the manner indicated above.
on the transfer/disposal of shares or real property.
Interest income
Dividend income
Income tax at the rate of 25% is deducted at source
Ordinary dividends paid by Jamaican tax-resident from gross interest paid to Jamaican residents (i.e. indi-
companies to Jamaican tax-resident shareholders are viduals and companies) by a ‘prescribed person’.
liable to tax at the rate of 15%. The tax is to be Prescribed persons include commercial banks and other
deducted on payment by the distributing company financial institutions.
and represents the final tax on such dividends. Addi- Interest paid by a resident person to a non-resident
tionally, the dividend income on which tax is pay- individual is subject to withholding tax (WHT) of 25%
able may not be offset by tax losses, and expenses (unless a lower rate of withholding is applicable by
incurred to earn the dividend are no longer deduct- virtue of tax treaty protection available).
ible in arriving at chargeable income.
Preference dividends that qualify as tax deductible
expenses of the paying company (see below) contin-
ue to be liable to tax at a rate of 25% where the
Dawgen Global

Account External
Advisory Audit
International Sales Tax
Tax
Planning Specialized Financial
Tax Planning Audits Reporting

Tax Audit

G L O B A L

Risk Advisory

Performance
Compliance Governance Transaction
Performance Services
Advisory
Technology ERM
Risk Valuation Forensic
Revenue Services Services
Internal Enhancement
Fraud & Audit
Ethics Restructuring M&A
Operational & Insolvency Integration
Improvement

www.dawgen.global Change
[email protected] Management
Tel: 876-926 5210/876-6302011
 G L O B A L

ABOUT DAWGEN GLOBAL

Dawgen Global is an integrated multidisciplinary professional service firm in the Caribbean Region. We are integrated
as one Regional firm and provide several professional services including: audit, accounting, tax, Information Technology,
Risk, HR Solution, Performance, M&A, corporate finance and other advisory services.

Our Caribbean regional network covers Jamaica. Trinidad and Tobago, Bahamas, Bermuda, the Cayman Islands, the
Eastern Caribbean (Barbados, Antigua, St Lucia, Grenada, and St Kitts & Nevis), the Netherlands Antilles (Bonaire,
Curacao, and St Maarten) and Aruba and the Turks and Caicos Islands.
International Tax: British Virgin Islands highlight 2018

Our regional focus is to improve services to local, regional and international clients. Through our affiliation and
membership in other Global Networks and Associations, we offer a global perspective while maintaining our regional
insight by seeking alternatives for you – we tap the power of both.

Our multidisciplinary teams of professionals leverage a wealth of industry-tailored, practical approaches to help you
discover opportunities for your business. Whether your organization is strong and healthy, under stress or facing difficult
choices, we work with you to find financial, strategic and operational solutions that improve your liquidity, financial
flexibility and stakeholder returns. We’re here to help you build a sustainable business – in the short and long-term.

Contact Information:

Regional Head Office : Dawgen Towers, 47-49 Trinidad Terrace, Kingston 5 | Jamaica
Telephone: (876) 929-2518| (876) 926-5210| (876) 630-2011| Fax: (876) 929-1300
Email: [email protected]