Proposed Reform of Customs and Income Tax Regimes
The government has announced its plans to conduct 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 its review has been completed by the Joint Select Committee. 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 Assets 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 (NHT, NIS and 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.
National Insurance Scheme (NIS)
With effect from 1 April 2022, the income threshold on which NIS contributions are calculated has been increased from 3 million Jamaican dollars (JMD) to JMD 5 million per annum.
NIS is payable by employees and employers at the rate of 3% each on emoluments not exceeding the maximum income threshold. Self-employed individuals are liable to pay NIS contributions at the rate of 6% of chargeable income not exceeding the income threshold.
Proposed Reform of Large Scale & Pioneer Industries Regime
The Large Scale & 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 revisit and amend this framework to enhance its utility, where needed, in order to attract large-scale projects.
Reduction in Import Duties for Electric Motor Vehicles
A number of imposts are applicable to the importation of hybrid and electric motor vehicles. The import customs duty (ICD) on the importation of
electric vehicles will be reduced from 30% to 10% for an initial five year period (up to 1,000 vehicles per annum, based on a recent announcement by the government.
Implementation of Common Reporting Standard
The Common Reporting Standard (CRS) was incorporated into the Laws of Jamaica in 2021. The local CRS framework requires financial institutions to report financial account information on non-residents to Tax Administration Jamaica (TAJ) and in turn TAJ shall exchange this
information with other competent authorities overseas. Correspondingly these overseas competent authorities will, under the CRS, submit financial account information in relation to financial accounts held by Jamaicans overseas to TAJ.
The implementation of the CRS locally will require that financial institutions make their first report under the CRS framework by May 2022 and that TAJ shall commence exchanging information under the CRS protocol by September 2022.