Corporate - Significant developments

Last reviewed - 04 March 2024

Proposed general consumption tax (GCT) regime for sale of second-hand vehicles

The government has announced its intention to introduce a margin scheme mechanism 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 of GCT.

This measure is expected to provide more options for the sale of second-hand vehicles and assist in building out the market for the second sale of vehicles.

Tax credit for solar residential Installation 

The government has announced the introduction of an income tax credit for the purchase and installation of residential solar photovoltaic systems. The tax credit would be available to employed and self-employed taxpayers and would be calculated at 30% of the cost of the system, up to a maximum system cost of 4 million Jamaican dollars (JMD). The credit is programmed to take effect from the year of assessment 2023.

Proposed reform of customs and income tax regimes

The government intends to implement a major overhaul of the Customs Act and Income Tax Act. In furtherance of this, a Customs Bill had previously been tabled in Parliament and is expected to be passed shortly. Details of the implementation process for the reform of the Income Tax Act are to be announced at a later date.

Proposed reduction in asset tax

An ad-valorem asset tax is imposed on the value of the assets of specified regulated entities, including deposit-taking entities regulated by the Bank of Jamaica, and securities dealers and insurance companies regulated by the Financial Services Commission. This tax is currently levied at a rate of 0.25% on the value of the ‘taxable assets’ of these institutions.

Plans were announced previously by the government to reduce this rate to 0.125%; however, this proposal was postponed in light of the economic uncertainties arising from the COVID-19 pandemic. More recently, the government reiterated its commitment to implementing this measure, but no revised implementation date was announced.

Proposed harmonisation of payroll taxes

Jamaica imposes multiple statutory levies and contributions on employers, employees, and the self-employed (National Housing Trust [NHT], National Insurance Scheme [NIS], and Human Employment and Resource Training [HEART] contributions, as well as Education Tax) and which currently accrue to four separate state agencies. The government has announced its intentions to consolidate these into a single payroll deduction, but no further information has been provided as to how it is proposed to be done.

Proposed reform of large-scale and pioneer industries regime

The large-scale and pioneer industries regime provides a mechanism through which additional income tax incentives can be offered in circumstances where the Minister of Finance designates (subject to affirmative resolution in Parliament) a project as an approved large-scale project or an economic activity as an approved pioneer industry.

The regime was introduced several years ago, but. to date, no regulations have been issued to support implementation. The government has announced its intention to amend these provisions to attract large-scale projects and to implement regulations.