Jamaica seeking to attract multinational corporations

By Admin Wednesday October 03 2012 in Caribbean
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KINGSTON: Jamaica is making adjustments to its tax regime to enhance its attractiveness for international business entities looking for a home in the Caribbean.

 

A bill encouraging overseas companies to establish their head offices in Jamaica, and to exempt officers of such companies from the payment of income tax, was passed in the House of Representatives last week.

 

The Bill – The Income Tax (Amendment) Act – was piloted by Minister of Finance and Planning, Dr Peter Phillips. After the Bill was passed without any amendments, it was sent to the Senate for approval.

 

Phillips noted that the Bill exempts persons who are not residents of Jamaica and who perform group head office activities from the payment of income tax.

 

“The point to note here is that not all activities of all foreign corporations are being exempt by this bill,” said Dr. Phillips. “The purpose of the bill is to provide incentives for large international corporations operating in multiple jurisdictions to move their activities to Jamaica.

 

“We are not giving up anything that we now have, rather it is seeking to attract additional economic activities to the country and expand the pool of tax over time generally, by virtue of these activities.”

 

Phillips said that any entity approved will be subjected to an approval process where it will need to meet the criteria for carrying out group headquarter activities being incorporated in Jamaica and ensuring that at least 30 per cent of its staff members are Jamaicans.

 

The Bill defines an approved group head office company as an entity or other body corporate that operates in Jamaica and other parts of the world and establishes its head office and performs, among other activities, the supervision, management or monitoring of its operations; accounting, data processing, engineering and other technical support; centralized treasury management and similar funding activities; and other such activities, as may be specified by the minister.

 

A company or other body corporate may apply to the minister, in the prescribed form and manner, for a certificate designating it as an approved group head office company.

 

The Bill also imposes an obligation on a group head office to notify the minister in writing, at least 90 days before the cessation of employment, of every employee to whom the exemption is given.

 

In addition, Phillips said that regulations are being drafted to address the audit and assessment methodology to be used in ensuring that the entity is operating in keeping with the Income Tax Act as it relates to the anti-tax avoidance measures and the arm’s length principle.

 

“In that regard, Cabinet also approved the introduction of transfer pricing rules which will be used to address any tax related transactions where the arm’s length principle is applicable,” he said.

 

Phillips also announced that the regulations in respect of the auditing and assessment methodology should be available by the end of this month.

 

“The transfer pricing rules are at the discussion stage, with one of the multilateral agencies offering assistance in drafting the rules,” he said. “Until transfer pricing rules are introduced, the arm’s length principle in the Income Tax Act will be applied.”

 

The measure received support from opposition spokesperson on finance, Audley Shaw, who noted the possibility for the improvement and expansion of investment in infrastructure.

 

“If we can attract more companies that will not just come to Jamaica and maybe rent office space, but eventually put up their own permanent building, which in itself becomes a new sign of commitment to permanence in their investment in Jamaica, then that will add further value to our economy,” said Shaw.

 

  • Shez Johnson said:

    I may not know much about commerce and business but what I do know is that based on what I have been hearing and reading. Jamaica’s social atmosphere is hostile and dismal. Poverty and violence are at an all time high. Who would want to set up shop in that kind of environment? I say Jamaicans should invest in Jamaicans more so, because after the foreigners come and go and leave the economy and the people in a worse situation than they were in. It is the Jamaican people who will suffer. When are the officials in this sector going to realize that they need to also look at investing in our most valuable resource “our people”.

    Friday October 12 at 11:08 pm
  • Hope said:

    If one seeks positive change, the insight that I see in Jamaica and the many who work towards positive change there, then it’s only fair to motivate/ nurture it or alternatively step away from their path. Hope is key, the start to a next chapter of something better, even one step better.

    Friday March 22 at 8:41 am

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