New revenue measures
There have been several revenue measure amendments in Jamaica for the Fiscal Year 2020/2021, which include changes as follows:
- A reduction in the standard rate of General Consumption Tax.
- A reduction of Assets Tax payable by Financial Institutions.
- A new Income Tax credit for small and medium sized entities.
- Reduction in regulatory fees payable to JACRA/Trade Board.
These changes are summarised below.
General Consumption Tax (GCT - similar to VAT)
The GCT regime, introduced in October 1991, is deemed one of the major sources of tax revenues for the Jamaican Government. Prior to 1 April 2020, the GCT standard rate was amended in June 2012, with a downward adjustment from 17.5% to 16.5%.
With effect from 1 April 2020, there was a further reduction in the standard rate of GCT from 16.5% to 15%. This also resulted in a reduction of the GCT rate on commercial imports from 21.5% to 20%. However, other rates of GCT remain unchanged, including GCT of 10%, which is imposed on tourism activities licensed by the Tourist Board of Jamaica, and GCT of 25%, which is levied on telecommunications services, prepaid cards and instruments.
The Assets Tax (Specified Bodies) Act, enacted in 2003, imposed tax on the value of the assets of an entity. The Assets Tax is payable at an ad valorem rate, which is currently imposed only on specified regulated entities, such as deposit-taking entities regulated by the Bank of Jamaica, and securities dealers and insurance companies regulated by the Financial Services Commission. However, the Assets Tax paid is not deductible for income tax purposes.
Since introduced, the Assets Tax Act has undergone several amendments, with its latest including a reduction in the rate of Assets Tax imposed on specified regulated entities from 0.25% to 0.125% of taxable assets. This measure is effective from the year of assessment 2021.
A special income tax credit of JMD 375,000 was introduced for Micro, Small and Medium Enterprises (MSMEs) from the year of assessment 2020, for both regulated and unregulated companies with annual sales/revenue that is equal to or less than JMD 500 million. The intent of this tax credit is to encourage the creation of MSMEs in Jamaica, as well as to level the playing field with unincorporated businesses that are entitled to a personal allowance of JMD 1,500,096.
This special income tax credit must be utilised by the MSMEs in the current year, as it cannot be carried forward or result in a refund.
Reduction in regulatory fees payable to JACRA/Trade Board
The Jamaica Agricultural Commodities Regulatory Authority (JACRA) is a statutory body that is responsible for the regulation, promotion, standardisation of the agricultural commodities industry which includes cocoa, coffee, coconut and spices. JACRA charges farmers fees for dealing in specified produce for importation and export. The Trade Board Limited is a regulatory agency of government tasked with certifying Jamaican exports and issuing import and export licences. Both institutions charge a fee for issuing these licences.
With effect from 1 April 2020, it was put forward that these fees should be reduced by 50%, with the remaining 50% being financed through government subvention. However, the reduction in fees would not be applicable to Trade Board fees payable by importers of motor vehicles.