Whether you are a new or seasoned business owner, there are some things you must know about taxation in Jamaica. There are four major taxes that businesses must pay, and they are the Income tax, Sales tax, Deed tax, and Resources tax. There are also several forms of taxation, such as tax credits, which are given to business owners to reduce the amount of tax they have to pay.
Sales tax
Fortunately for us Jamaicans, our sales tax rate is lower than most of the US. As a result, it is a lot easier to maintain a tight grip on our hard-earned cash. In this respect, a savvy business owner should keep an eye on several revenue sources. If you are considering moving your operation overseas, be sure to research the tax laws of the land before you leap. While you are at it, keep an eye out for tax snobs, and be sure to take advantage of your tax rep’s expertise. Taking a proactive approach to your taxes will not only save you money, it will also make you feel more at home. Using a tax agent with a vested interest in your success is the best way to ensure that your business is in good hands. This is particularly true if you are moving into an area populated by affluent expats. Having a reputable tax agent on speed dial is a must for any savvy business owner. If you are planning on moving your operation to the Caribbean, be sure to speak with a professional before you make the move. For more information, be sure to read up on Jamaica’s sales tax rate and take the free tax comparison survey.
Income tax
Almost 40 per cent of Jamaica’s economic activity is not taxed. The government has implemented a number of IMF programs that have helped attract investments and reduce the tax burden. However, a study by the Inter-American Development Bank found that only one per cent of companies pay corporate income tax in Jamaica.
The individual income tax in Jamaica is used to fund the government’s development programs and ensure economic justice. The rate for individuals in Jamaica is 25%. It increases to 30% for incomes above JMD $6 million.
Income tax in Jamaica is administered by a system known as PAYE. This system processes taxes on employees, including income tax and social security payments. PAYE is a source of tax revenue for the government, generating $27 billion in 2003-04.
In addition to the income tax, businesses in Jamaica pay the Minimum Business Tax, which is taxed on business assets. The tax is payable in addition to all other taxes.
Companies in Jamaica that receive interest from non-resident lenders are taxed on the interest at a rate of 25% or 30%. In addition, residents pay a transfer tax on the market value of certain assets.
Pensioners in Jamaica are also eligible for an exemption from income tax. This includes an allowance of $80,000. They must also declare their world income.
Taxes are calculated and withheld in an uneven way. The lowest income groups are subject to 10 to 16 percent of their income in tax. The highest income groups pay between 14 and 19 percent.
The tax system has evolved significantly since the introduction of the Income Tax Act in 1931. Today, it is more effective than in most developing countries.
WHT
Several tax deductions may be available for a business in Jamaica. This is the case in cases where companies pay taxes on the income they receive from other countries. However, there are no tax deductions for the payment of dividends or capital gains.
In the case of dividends, there is a withholding tax on dividends paid to shareholders in Jamaica. This is now 15%. The tax rate is similar to the rate for income arising from other taxable sources.
For other taxable sources of income, such as interest and the gross amount of dividends, there is a withholding rate of 25%. However, for non-resident corporations, a withholding rate of 33 1/3% is applied.
There is also an income tax on the transfer of profits from an overseas head office to Jamaica. The profits are taxed at the same rate as local corporations. A nil rate applies for tax benefits on affiliate companies. However, this rate is subject to some issues, such as time of supply.
There are also taxes on the income of residents of Jamaica. These taxes include income tax, investment company profits tax, transfer tax, and WHT. In addition, there is an import tax on imported goods into Jamaica.
A company is classified as a regulated or non-regulated company. Regulated companies include banks and financial institutions. Non-regulated companies include those with central management outside Jamaica.
The Corporate Income Tax rate for large, unregulated companies has been reduced from 331 % to 30%. The Tax Administration of Jamaica published an Advisory Guide No. 051622/01/GCT-TA.
The withholding tax on dividends paid to individual shareholders in Jamaica was lowered from 25% to 5%. The tax on income from estates and trusts is also lowered. However, this rate will increase to 30% if an individual’s income exceeds $6 million JMD per year.
Deed tax
Buying real estate in Jamaica is a complicated process. It is important to hire an attorney to help with the legal process. There are different taxes on real estate in Jamaica.
Property tax is a charge levied on all property in Jamaica. It is calculated on the unimproved value of land. It provides revenue for public amenities provided by the local government. It is based on different value bands. Rates range from 0.50% to 0.90%.
Stamp duty is imposed on a variety of legal instruments. The rate varies according to the type of document. The most common types of documents are land deeds, wills, mortgages, and contracts.
There are 29 tax offices across Jamaica. The Montego Bay Tax Office is open from 8:00 am to 4:00 pm. The Savanna-La-Mar Tax Office is open from 10:00 am to 4:00 pm.
The transfer tax is a tax on the transfer of property. It is assessed at two percent of the market value of the property. It is also applicable on the consideration payable. It is applied on transfers by court order, compulsory acquisition, and equitable transfer.
The tax is not imposed on inheritance gifts. It is also not imposed on gifts of movable property. Gift deeds are valid if the transferor is an absolute legal owner of the property. If there are no court orders to prevent the transfer, the deed is valid.
Transfer tax has been reduced from 7.5 percent to four percent. The RAJ head said that the reduction in the tax rates increased the transaction volumes. It is possible to pay using credit cards, debit cards, or cash.
Transfers are exempted from transfer tax if they are made to a registered charitable organization, registered superannuation fund, or listed securities on the Jamaica Stock Exchange (JSE). It is also exempt from stamp duty.
Resources tax
Historically, Jamaica has had a tax system with a narrow tax base. This has contributed to inequity and declining revenues. However, the government has recently implemented reforms in this area. It is hoped that these reforms will promote tax equity and ease of doing business in Jamaica.
The Mines and Geology Division (MGD) within the Ministry of Transport and Mining are responsible for granting appropriate mining licenses and rights. It also conducts environmental permitting and air quality protection.
Mining is one of the country’s main economic activities. However, mining activities also have the potential to displace residents. In order to comply with local regulations, mining companies must provide compensation for displaced residents. They must also offer suitable accommodation. This compensation may include a payment for the use of a building.
Bauxite mining in Jamaica requires strict environmental monitoring and permitting processes. It is also subject to a general tax regime. The Bauxite Mining Act prescribes a royalty of US$0.5 per ton of bauxite mined.
Besides being a major source of foreign exchange, mining also contributes to over half of Jamaica’s GDP. Mining is regulated by the Mines Act and the Mineral (Vesting) Act 1947. Mineral deposits are classified according to internationally agreed definitions.
The Mining Act requires the holder of a mining lease to report the discovery of a mineral and keep accurate records. In addition, the Commissioner of Mines can prescribe conditions for export. Minerals cannot be exported without payment of a royalty.
In addition to mining, Jamaica’s economy is heavily reliant on agriculture, forestry, and metals. This reliance is reflected in the tax system. The tax system has been characterized by non-standard incentives and distortionary waivers.
