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The Government of Jamaica has provided a number of
investment incentives, which are accessible by both
local and foreign investors. The following offers
a listing of the more prominent incentives presently
being offered by the Government in each sector, as
well as those that may be applied across a number
of sectors. JAMPRO is the facilitator for access to
these incentives and therefore, if a potential investor
wishes to take advantage of these facilities first
contact is made with us.
The farmer that engages in the production of certain
crops qualifies for ‘approved farmer’
status and the ensuing benefits. Activities qualifying
include:
- Most agricultural products grown and produced
in Jamaica
- Companies involved in the hatching of eggs
The successful attainment of 'approved farmer' status
guarantees the farmer income tax and import duty concessions
for up to ten years, after which the status may be
renewed.
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A ‘recognized film producer’ is entitled
to:
- Relief from income tax for a period not exceeding
nine (9) years from the date of the first release
of the motion picture
- An investment allowance of 70% of the expenditure
on the facilities, which may be carried forward
beyond the initial nine (9) year period, is also
granted for income tax purposes
- Exemption from the payment of import duty on equipment,
machinery and materials for the building of studios
or for use in motion picture production.
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To qualify for incentives under this act the manufacturer
must be an exporter of manufactured products. In the
case of a full exporter (that is, 100% of the goods
manufactured are exported), the business must be designed
to export manufactured products in exchange for hard
currencies (therefore, the CARICOM market is not usually
the focus of this exporter). In the case of a partial
exporter, producers must export a threshold of 5%
of their production to non-CARICOM markets.
Having fulfilled these requirements the manufacturer
may receive concessions on income tax for ten (10)
years as well as exemption from import duties on raw
materials and machinery. The income tax rebate is
granted according to the percentage of export profits
to total profits. For new exporters, the rebate is
calculated based on percentage of export sales to
total sales, while for the already existing exporter,
the rebate is calculated based on incremental export
sales over a base year. The Act has been amended to
provide benefits where incremental exports to non-CARICOM
countries are in excess of 5% of total exports.
Before a manufacturer can take advantage of the concessions
made available by this Act, they have to ensure that
all transactions must be conducted in US currency
in addition to the fact that they are actually located
within the free zone area. However, some firms outside
of the free zone area may be allowed to benefit under
the single entity free zone incentive. To get single
entity free-zone status, a company must:
- be registered according to the provisions
of the Companies Act
- export at least 85% of its production,
and
- receive an approval from the Bank
of Jamaica.
The ‘free-zone’ status
enables manufacturers and service providers (in the
case of informatics free zones) to benefit from the
exemption from income tax on profits as well as import
duties and licensing. Furthermore, there exists a special
provision under this Act, which permits the repatriation
of foreign exchange by overseas investors to its parent
company without any form of recourse on the part of
the Government.
Qualified businesses must be certified by the Ministry
of Industry, Commerce and Technology. For data processing/system
development businesses, at least 20% of its gross
income must be derived from exports. Upon qualification,
a certified business is granted a special allowance
of capital expenditure for:
- 50% of the full cost of any new machinery in the
year of purchase, and
- a further 50% in the 2nd year.
Under this Act, if a business is engaged in the mining
of bauxite or the production of alumina in Jamaica
they are automatically qualified for import duty concessions
on capital goods, lubricating oils, grease and other
chemicals.
A registered oil refiner may import articles for the
construction and operation of the refinery as well
as for the purpose of manufacturing petroleum products
duty free. Furthermore, the manufacturer is exempt
from paying income tax, or tax on dividends paid to
shareholders, for a period of up to seven (7) years
after which he has six (6) years to carry forward
net losses incurred during that period.
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For a hotel to benefit from this Act they must contain
ten (10) or more bedrooms as well as facilities for
meals and the accommodation of transient guests, including
tourists. The Act offers income tax relief and duty
concessions for up to fifteen (15) years for convention-type
hotels (hotels with at least 350 bedrooms), and ten
(10) years for regular hotels.
The resort cottage must contain at least two (2) furnished
bedrooms with kitchen, living room and bathroom facilities,
used for the accommodation of transient guests including
tourists, in order to qualify for reward. In this
case, the business receives income tax relief for
up to seven (7) years as well as duty free importation
of building materials and furnishings.
Background
The Ministry of Tourism & Sport requested approval
from Cabinet for a second round of the Short-Term Incentive
Package (STIP) of Assistance to the Tourism Industry
when it was determined that the first incentive package
was significantly under-subscribed. On October 1, 2001,
Cabinet approved the request.
Current Status
Cabinet has approved the following for the STIP II
Programme:
- granting of General Consumption Tax (GCT) and
customs duty benefits on specific items bought locally
or imported for the refurbishment and/or expansion
of accommodation facilities (particularly small
and medium-sized properties) that do not currently
qualify to receive benefits under existing incentive
legislation, i.e. the Hotels Incentives Act and
the Resort Cottages Incentives Act.
- that in the case of large properties of over one
hundred rooms, a rigorous assessment will be undertaken
to determine their eligibility for benefits under
STIP II.
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Background
The decision to set up a pro-competitive telecommunications
sub-sector was made when the Jamaican Government,
through its then Ministry of Industry, Commerce &
Technology auctioned two cellular licences in 1999,
earning over US$92 million in licensing fees. Licences
have also been approved for various services such
as Internet, broadcasting and data services.
Current Status
Phase II of the telecommunications liberalisation
took place in November 2001; twenty-nine companies
were issued with telecommunications licences. In June
2002, US-based AT&T was the sole bidder for the
fourth cellular licence. However, the offer was below
the government’s reserve price of US$15 million.
(With the sole bidder offering less than the reserve
price, the government can either reopen the bid or
negotiate with AT&T) Full liberalisation is planned
for March 1, 2003 when the market for incoming and
outgoing international voice traffic is deregulated.
Table 2 presents major FDI inflows in the ICT sector
in Jamaica since 2001. The heavy investments from
the new telecoms entrants prove the direct correlation
between increased FDI flows and liberalisation.
Before a manufacturer can take advantage of the concessions
made available by this Act, they have to ensure that
all transactions must be conducted in US currency
in addition to the fact that they are actually located
within the free zone area. However, some firms outside
of the free zone area may be allowed to benefit under
the single entity free zone incentive. To get single
entity free-zone status, a company must:
- be registered according to the provisions
of the Companies Act
- export at least 85% of its production,
and
- receive an approval from the Bank
of Jamaica.
The ‘free-zone’ status
enables manufacturers and service providers (in the
case of informatics free zones) to benefit from the
exemption from income tax on profits as well as import
duties and licensing. Furthermore, there exists a special
provision under this Act, which permits the repatriation
of foreign exchange by overseas investors to its parent
company without any form of recourse on the part of
the Government.
Qualified businesses must be certified by the Ministry
of Industry, Commerce and Technology. For data processing/system
development businesses, at least 20% of its gross
income must be derived from exports. Upon qualification,
a certified business is granted a special allowance
of capital expenditure for:
- 50% of the full cost of any new machinery in the
year of purchase, and
- a further 50% in the 2nd year.
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If the business is a producer of an ‘approved
product’ which has a supply market of less than
60% of the demand market, then they may gain ‘approved
enterprise’ status and thus, stand to benefit
from this Act. This exempts them from the payment
of income tax for a period of time, depending on the
product.
An FSC is a foreign sales corporation, which is allowed
to earn some tax exemption on its exports to the USA.
This Act provides relief from the Common External
Tariff and the General Consumption Tax on equipment,
machinery and materials coming into the country. In
addition, it provides for up to five years income
tax relief.
In an effort to promote offshore banking facilities,
government has provided international financial companies
with income tax relief on both profits and capital
gains.
Once a company is recognised as an ‘approved
Shipping Corporation’ they may receive tax relief
and concessions on import duties for up to ten (10)
years.
This is granted to companies which do not qualify
under existing incentives laws yet have the potential
to contribute significantly to foreign exchange earnings,
employment, and so on. If the company is able to prove
that it holds this potential, it may be granted relief
from import duties for up to three years by the Minister
of Finance.
Application Form
To qualify under this incentive programme the investor
must provide necessary support, service, or raw material,
to export manufacturer(s); or, be involved in export
trade or plan to enter the export market. This will
guarantee them relief from the General Consumption
Tax levied on capital goods.
This Act is targeted at persons or organizations that
facilitate or carry out urban development in depressed
areas. Relief from income tax, stamp duty and transfer
tax is given to those persons who engage in transactions
geared towards urban development.
This law focuses on companies who construct factories
and lease or sell them to manufacturers under the
Export Industry Encouragement Act . It grants relief
from:
- import duties for items which are not available
locally, and
- income tax on income from factory leasing or gains
made from sales.
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Under the provisions of Tariff Item 807 of the USA,
American components assembled outside of the US and
re-imported into the US, do not attract import duty
on the full value of the imported assembled product.
Instead, the US duty levied is equal to the full value
of the imported articles less the cost or value of
such products of the United States. It therefore means
that exporters of goods made up of US component parts
may gain access to the American market, duty free.
The Government of Jamaica has no restrictions on the
movement of foreign currencies flowing either into
or out of Jamaica. This facilitates the free movement
of capital to other countries, whether for investment
or repatriation purposes.
Additionally, Jamaica is party to a number of bilateral
trade agreements with countries in:
Asia: China, Republic of Korea
Latin America: Costa Rica, Dominican
Republic, Mexico
Africa: Nigeria
Europe: Czech Republic, Hungary,
Norway and the Russian Federation
It is also member of a number of international free
trade blocs such as CARICOM and WTO. Agreements also
exist between Jamaica and a number of South American
and Spanish Caribbean countries through joint CARICOM
agreements. For a listing of trade agreements, click
here.
This covers the various programmes that are funded
by international agencies and administered by the
JAMPRO/ITAP Department. These programmes are made
available to persons wishing to make investments believed
to have the potential to contribute to Jamaica on
a developmental level. The main organisation that
presently funds these types of development programmes
is the European Union through the European Development
Fund (EDF). For further information on ITAP, click
here.
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