Jamaica

Reduction in corporate income tax (CIT) rate for independent power producers (IPPs)

In order to encourage further investment in renewable energy, the government has announced its intention to amend the income tax law to exclude independent power producers (facilities generating electricity for sale to the national grid) who produce energy from renewable sources from the definition of 'regulated company', which is currently liable to income tax at a rate of 33⅓%. The amendment, which became effective for the year of assessment 2023, will have the effect of reducing the CIT rate for IPPs to the standard rate of 25%. This reduction, however, will be applicable only to IPPs who produce 75% or more of renewable energy from wind or solar and are regulated by the Office of Utilities Regulation. They will be ineligible to claim an employment tax credit in computing their net income tax liability.

Amendment to the equity cap for new listings on the Junior Stock Exchange

Companies listed on the Junior Stock Exchange benefit from a number of tax incentives; however, the maximum participating voting share capital of these entities is restricted to 500 million Jamaican dollars (JMD). This equity cap has been in place since 2016 and is seen as an impediment to the growth of micro, small, and medium-sized enterprises (MSMEs) wishing to raise capital through the junior market. With effect from the 2024 year of assessment, the maximum voting capitalisation will be increased to JMD 750 million, but this new cap shall be applicable only to new listings on the Junior Stock Exchange.

CIT rate applicable to regulated trust and corporate service providers

The Trust and Corporate Service Providers Act regulates service providers engaged in the provision of regulated trust and corporate services. Under this framework, these entities are regulated by the Financial Services Commission (FSC). Consequent on their regulation by the FSC, this brought them within the scope of the higher rate of CIT imposed on regulated companies. The proposed amendment, which came into effect in the 2023 year of assessment, seeks to reinstate the standard rate of CIT of 25% to such activities and alleviate concerns expressed by the industry.

General consumption tax (GCT) margin scheme for sales of second-hand vehicles by car dealers, etc.  

A GCT margin scheme mechanism has been introduced whereby GCT-registered taxpayers (such as car dealers) may account for GCT on the second sale of a motor vehicle based on the difference between the purchase and selling price of the vehicle. Second sales by private individuals will continue to be liable to a flat rate GCT of JMD 12,000/18,000). This measure will provide more options for the sale of second-hand vehicles, build out the market for second-sale vehicles, and provide greater visibility of the transactions to Tax Administration Jamaica (TAJ).

Removal of GCT on imported raw foodstuff

Under the current regime, the standard rate of GCT (15%) is applicable to the importation of raw foodstuff (e.g. fruits, vegetables, meats, fish, ground provisions), whereas the supply within Jamaica of domestically produced raw foodstuff is exempt from GCT. This disparity in treatment was an attempt to provide an additional measure of protection for local agricultural products against cheap imports; however, this differentiation in the GCT treatment of local products versus imported products is seen as potentially being in contravention of the General Agreement on Tariffs and Trade (GATT).

The government announced its intention to extend the same GCT exemption that is now afforded to locally produced products to imported raw foodstuff with effect from the first quarter of the current financial year.

Removal of GCT on armoured cash courier vehicles

Companies operating an approved cash courier business will be able to import armoured vehicles in excess of cost, insurance, and freight (CIF) value of 33,000 United States dollars (USD) free of GCT. The added cost of armouring an existing courier vehicle will not be subject to GCT.