Amendments to SEZ Act to Benefit Local And International Stakeholders

Recent amendments to the Special Economic Zone (SEZ) Act 2016, are to benefit local and international stakeholders.

Legal Officer, Kristin Lewis, of the Legal Services Unit of the Jamaica Special Economic Zone Authority (JSEZA), provided details during a recent sensitisation session, titled, ‘In the Zone’.

She noted that amendments were made to clarify that business activities within the zone made stakeholders eligible for fiscal incentives and not just trade activities.

The amendments also clarified the application of incentives to income derived from shares by specifying the shareholdings.

The rationale for this change, she said, is to benefit stakeholders and provide clear guidelines to SEZ stakeholders.

‘Rental-earning activities’ was substituted for ‘zone-related activities’ (other than as a zone user) under Paragraph 4(7). This change aligns the SEZ Act with the role of the Multipurpose Occupant and clarifies that Developers and Occupants need to carry out activities within the zone.

Speaking to the 4th Schedule, the Legal Officer highlighted that Paragraph 1 of this Schedule, which deals with the eligibility criteria to be applied by the Authority, now legislates substance requirements.

This substance requirement, according to the Authority’s Interim Chief Executive Officer (CEO), Kelli-Dawn Hamilton, “is where companies have to show that they are actually operating, and so we would have changed some of the language in the legislation, which allows us to meet that requirement”.

Meanwhile, Ms. Lewis pointed out that the impact of this amendment is that it now includes in the legislation what was previously an administrative requirement of the JSEZA, noting that all SEZ developers and occupants must conduct core income-generating activities within the zone.

It also requires that an adequate number of qualified employees must work within the zone to support the activities and generate the necessary operating expenses.

Ms. Lewis further pointed out that while these activities can be outsourced, they “must be done within Jamaica and meet certain conditions”.

Additionally, the Legal Officer noted that “even prior to the amendments, we would have required, as a body, that companies establish the investment that they would be making in the country, in terms of buildings, machinery, equipment and others”.

“What this new amendment has done is that it aligns us with international guidelines and helps to mitigate base erosion and profit shifting. This augurs for a better reputation as an investment destination and increases our competitiveness, creating the potential for greater trade opportunities for our SEZ stakeholders,” Ms. Lewis said.

“This is a major benefit to us that will have spin-off effects and impact on our stakeholders, she added.

The amendments to the SEZ Act were approved on November 30, 2022 and came into effect on December 1, 2022.

In highlighting the positive developments, the Interim CEO stated that “these amendments were made in response to an economic policy decision by the Government of Jamaica and are focused on improving our legislative framework, in order to better facilitate investments, increase trade, and exports through our SEZs”.

“The Authority takes into account all stakeholders and their contributions to the SEZ Regime, and we will keep reviewing our policies to ensure that, as the Authority, we provide our investors with the best possible services, in accordance with all applicable laws in Jamaica, global legislation, standards and best practices,” Ms. Hamilton continued.

She said the objective is to move ahead to ensure that the regime remains compliant and also remains effective in ensuring that businesses are able to operate effectively and efficiently.

The JSEZA is a body corporate administered by the Ministry of Industry, Investment and Commerce, with responsibility for facilitating the development and promotion of investments in Jamaica’s SEZs.