Modernization of Industry Programme

This incentive provides for waiving General Consumption Tax chargeable on the acquisition of machinery and equipment directly related to the manufacturing process.

Urban Renewal Act

This Act is targeted at persons or organizations that facilitate or carry out urban development. Relief from income tax on rental income and interest, stamp duty, and transfer tax is given to those persons who engage in transactions geared towards urban development, i.e., the metropolitan centres of Kingston and Montego Bay.

A tax credit is also available for expenditure incurred on capital improvement in a designated special development area. Lessees of the improved properties can claim a tax deduction of 200% of rent paid, subject to conditions.

Factory Construction Law

This Law targets companies which construct factories and lease or sell them to producers. It grants relief from import duties for items which are not available locally, and income tax on factory leasing or sales

Special Economic Zones Act

Effective January 2016, the Special Economic Zones (SEZ) Act replaced the Export Free Zones Act. The SEZ Act established an incentive regime to support the development, operation, promotion, and management of SEZs.

A company may be known as a ‘developer’ or an ‘occupant’ under the SEZ Act. The approved developers and occupants are eligible for the following incentives:

Reduced corporate tax at the rate of 12.5%;
Exemption from income tax on profits derived from the rental of property in the SEZ, except where the tenant and landlord are related persons;
Promotional tax credit in respect of expenditure on R&D and training, capped at 10% of the taxable income from operations within the SEZ;
0% tax on dividend income and no withholding tax on dividend payments made out of taxable income from operations within the SEZ;
No asset tax; and
Reduced property tax, transfer tax, General Consumption Tax (VAT), and customs duty.

SEZ incentives do not apply to mining or quarrying for natural resources, services pertaining to tourism, telecommunications, public utilities, financial services, construction, real estate, and property management.

Pursuant to a review of the SEZ regime by the Forum on Harmful Tax Practices (FHTP) of the OECD in 2020, it was determined that modifications are needed in the regime to make it compliant with international standards. The regime is amended to incorporate the substance requirement obligation to be fulfilled by companies for enjoying the beneficial tax treatment and to ensure that there are reduced opportunities for revenue leakage locally or shifting of profits internationally. Accordingly, on 3 October 2022, Jamaica's Ministry of Industry, Investment, and Commerce proposed the following amendments to the regime:

Only companies that undertake core income-earning activities can operate within SEZs; and
Companies carrying out intellectual property activities within SEZs cannot operate after 31 March 2023.

On 17 November 2022, Jamaica approved the Income Tax (Amendment) Act, 2022, which ensures that the SEZ regime is compliant with international standards. Further, the SEZs are now eligible to claim the benefit of employment tax credit (see below) which was earlier prohibited for entities operating in SEZs.

Employment Tax Credit (ETC)

A non-refundable ETC of up to 30% of the income tax payable on trading profits is available to employers. The ETC is computed with reference to the social security contributions (see Sec. 8.1.1.) paid by the employer within the due date. Therefore, with ETC, eligible employers may qualify for the benefit of a reduced effective corporate tax rate of 17.5%.

If a distribution to shareholders is made by a company, the ETC is clawed back by the tax authorities to the extent of 10% of the distribution where the tax imposed on the shareholder is less than 10%. The ETC clawed back must be repaid to the tax authorities within 14 days from the end of the month in which the distribution is made.

Accelerated Depreciation/Special Capital Allowance

Qualified businesses must be certified by the Ministry of Industry, Commerce, and Technology. For data processing/system development businesses, at least 20 percent of its gross income must be derived from exports. Upon qualification, a certified business is granted a special allowance of capital expenditure for 50 percent of the full cost of any new machinery in the year of purchase and a further 50 percent in the second year.

International Technical Assistance Programme (ITAP)

This covers the various programs that are funded by international agencies and administered by the JAMPRO/ITAP Department. These programs are made available to persons wishing to make investments that are deemed to have the potential to contribute to Jamaica on a development level. The main organization that presently funds these types of development programs is the European Union through the European Development Fund (EDF).

The Exchange Control Act

The Government of Jamaica has no restrictions on the movement of foreign currencies flowing either in or out of Jamaica. This Act facilitates the free movement of capital to other countries, whether for investment or repatriation purposes.

Incentive for Junior Stock Market Companies

Companies listed on the Junior Market of the Jamaica Stock Exchange can claim a 100% corporate tax exemption in the first 5 years from the date of listing, followed by a 50% corporate tax exemption in the next 5 years.

Incentive for Micro, Small, and Medium Enterprises (MSMEs)

A non-refundable tax credit of JMD 375,000 is introduced for MSMEs from the tax year 2020. MSMEs are companies with annual revenues not exceeding JMD 500 million. The tax credit must be utilized in the year in which it is granted and any unutilized tax credit cannot be carried forward to the subsequent tax years.

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