Income tax credit for MSMEs
The Government has announced a special income tax credit for micro, small, and medium enterprises (MSMEs) in Jamaica. This credit, which is worth $375 thousand per year, will be available to both regulated and unregulated companies. The program has been designed to help these businesses grow and compete on a level playing field with larger and more established companies. But one catch: the credit cannot be carried forward or refunded.
While the measure is still in the nascent stages, it is already a significant step forward. It has already been approved by the House of Representatives and the Senate, making it a step closer to becoming law. The initiative is being piloted in the Upper House by Senator Kamina Johnson Smith. The senator has already indicated that the initiative is crucial for MSMEs, who account for 95 per cent of the classified taxpayers.
The Government has introduced an income tax credit for MSMEs in Jamaica, which will allow them to enjoy the same benefits as larger companies. The credit is equal to 30 per cent of the income tax liability of the business, which is equal to the amount of employer and employee statutory contributions, or PAYE. The tax credit for MSMEs should be factored in when determining cash flows and planning for future tax payments.
The Government of Jamaica is banking on the MSME sector to grow its economy. It is the largest private sector segment, and it is estimated that MSMEs make up 43 per cent of the country’s economy. A higher participation rate of MSMEs in the formal sector could transform the country’s economy. It is currently planning to implement a policy paper to reduce the informality rate among MSMEs.
The Government of Jamaica has established the RESET Foundation, a partnership between the Government of Jamaica and Japan International Cooperation Agency (JICA). The foundation maintains a comprehensive training network to support entrepreneurs and help them develop their businesses. It also provides support and financial assistance to social enterprises in the country.
Income tax relief for large-scale projects & pioneer industries
The Government of Jamaica has recently passed new legislation to improve the tax system, increase investment, and reduce state revenue losses. The legislation repeals 11 industry-specific incentive schemes but does not affect the Petroleum Act. It also allows the Minister of Finance to grant incentives to large-scale projects and pioneering industries.
The new Act is designed to promote new and innovative industries that will improve the economy in Jamaica. To qualify, pioneer industries must not be conducted on a commercial basis in Jamaica. They must also involve the commercial application of scientific research and have a transformational effect on the economy.
In addition to the new law, the Government of Jamaica has created the Special Economic Zone (SEZ) Act. This act is intended to promote and develop SEZs in Jamaica. The SEZ Act provides a range of incentives to companies operating in this new territory.
The new legislation is essential to promote growth in Jamaica. Jamaica has significant untapped potential and should make a concerted effort to harness these opportunities. To make the most of its potential, it is vital to improve governance. The government should also provide better incentives to encourage innovation and new businesses.
SEZs are special economic zones that provide tax relief for investors and occupants. It is important to remember that these zones are not exclusive to foreign investors. Foreign companies are treated equally to domestic companies when they invest in Jamaica. They are required to register with the Registrar of Companies.
Minimum business tax
The Minimum Business Tax (MBT) in Jamaica is a mandatory tax that all businesses must pay, regardless of size. It was introduced in April 2014 and applies to businesses in Jamaica and overseas. It is also payable by individuals whose annual gross revenue is over JMD 3 million. It is not a substitute for an income tax and is payable on a quarterly basis, not annually.
There are a number of reasons that a small business should consider doing business in Jamaica. The country’s economy relies on small and medium-sized businesses that provide employment for many citizens and account for the majority of transactions. This is why the 2019/20 budget includes measures to reduce tax burdens for small businesses.
The minimum business tax is $60,000 for each year of assessment. This is payable in two equal installments on June 15 and September 15 of the year. In addition, the minimum business tax is required to be paid by certain specified persons who operate a business in Jamaica. The minimum business tax in Jamaica is a necessary part of a wider policy effort to promote financial inclusion and to encourage the formalization of businesses in the country.
In addition to companies that are exempt from income tax, companies operating under the income tax incentive regime are subject to Minimum Business Tax. This tax is zero percent and does not replace the obligation to pay estimated income tax. However, the MBT is credited to the income tax payable for the year of assessment and claimed on the final income tax return.
Income tax in Jamaica applies to both residents and non-residents. Taxes are based on the source of income. For individuals residing in Jamaica, the income they receive from working in the country is taxable. Non-domiciled individuals must pay taxes on any compensation received for services rendered in Jamaica.
Special Economic Zones (SEZ) Act
The Special Economic Zones (SEZ) Act of Jamaica provides a number of small business tax benefits to new and existing businesses. Under the SEZ Act, the SEZ Authority grants operating certificates to various entities. An entity that receives an operating certificate is known as a developer. This entity is expected to build, finance, and maintain the infrastructure within the SEZ. Another entity that can receive an operating certificate is known as an occupant. An occupant is a person who conducts business within an SEZ under a sub-concession agreement with the developer.
The SEZ Act also requires the establishment of an authority. The authority will have a supervisory role in determining whether the SEZ is suitable for the business. It has a list of approved and prohibited activities. The list includes extractive industries, tourism, telecoms, financial services, construction, and real estate. The authority will also promote research on zone activities. It will also make recommendations to the Minister of Industry.
The SEZ Act also allows businesses to benefit from several tax advantages. The benefits include the exclusion of income tax on profits from rental properties in the SEZ. Other benefits include a capital allowance and promotional and employment tax credits. In addition, companies operating in the SEZ are exempt from transfer tax and stamp duty. They can also enjoy no general consumption tax (GCT) on certain goods that enter the SEZ. Finally, exports of goods from the SEZ are subject to no customs duty.
The SEZ Act is intended to promote investment in Jamaica. Its main aim is to attract foreign and domestic investors. By creating a business environment where companies can flourish, the SEZ will generate employment and increase productivity. It will also help create a strong supply chain for domestic suppliers.
The Special Economic Zones Act has been amended to provide for a more competitive business environment. The reform will affect some SEZ benefits, but it will have limited effects. The most important features of SEZ tax incentives will remain unchanged. As a result, further reforms may be possible in the medium to long term.
