- The Ministry of Finance and Planning will be staging meetings and consultations on the Omnibus Fiscal Incentive Legislation.
- A special hotline will also be established within the Ministry’s Tax Policy Department that persons can call to get additional information and clarification.
- The Minister stated that the legislation, passed in the House of Representatives last month, represents a significant advancement in the Government’s efforts to reform Jamaica’s tax structure.
The Ministry of Finance and Planning will be staging meetings and consultations on the Omnibus Fiscal Incentive Legislation, as it seeks to engage stakeholders on the provisions of the recently passed bill.
Portfolio Minister, Dr. the Hon. Peter Phillips, informed that a special hotline will also be established within the Ministry’s Tax Policy Department that persons can call to get additional information and clarification.
The legislation’s provisions, he said, “can only work on the basis of full understanding, but also openness and transparency at every level”, while assuring that “we are open to discussions about this.”
He was addressing a forum hosted by the Ministry on Wednesday, December 4, at the Jamaica Conference Centre, downtown Kingston.
The Minister stated that the legislation, passed in the House of Representatives last month, represents a significant advancement in the Government’s efforts to reform Jamaica’s tax structure, and is a fundamental improvement on the previous regime.
It seeks to establish a transparent and comprehensive system to govern all tax incentives.
Its passage forms part of the Government’s economic reform programme, and is one of the pivotal structural benchmarks of the administration’s four-year Extended Fund Facility (EFF) negotiated with the International Monetary Fund (IMF), aimed at reducing the country’s debt and spurring economic growth.
Dr. Phillips noted that for many years, Jamaica had a taxation regime predicated on high headline rates and a “series of negotiated exceptions.” This, he argued, has had an overall negative impact on Jamaica’s economy by, among other things, distorting capital flows, which saw some sectors benefitting at the expense of others.
“It has created the suspicion, at the very least, that there is not a level playing field between various segments of the investor community and that some are privileged and others are less so. It was, as far back as 2012 and, indeed, before, when Parliament was discussing the Green Paper on tax reform and the subsequent White Paper (that) it was recognized that we needed to reform the system, fundamentally,” the Minister stated.
Describing the legislation as one of the more “far-reaching” tax reform efforts by the administration, Dr. Phillips said it is expected to, among other things, help create the platform to facilitate expanded production through greater inputs by small, medium, and large stakeholders.
“Our only long-term prospect of reducing our debt and developing a healthy balance of payment current account rests upon our capacity to stimulate production in our domestic economic environment. We can’t subsidize consumption at the expense of production. Unless we are able to earn, we will not be able to service those debts; so we have to make the adjustment to earn our way,” he argued.
The Bills comprising the Omnibus Legislation are the Fiscal Incentives (Miscellaneous Provisions) Act; and the Income Tax Relief (Large Scale Projects and Pioneer Industries) Act 2013.
The Fiscal Incentives Act sets out the reforms to be carried out to the corporate tax structure including the introduction of an Employment Tax Credit (ETC), changes to the capital allowance regime, and revision of provisions governing the utilisation of tax losses. The Bill also deals with “grandfathering” and transitional arrangements relating to change from the old to the new incentives regime.
The Income Tax Relief Act provides for the designation of large scale projects and pioneer industries that would qualify for tax credit under the Income Tax Act.
Other elements of the framework for the new Omnibus Incentive Regime namely the (Customs Tariff (Revision) (Amendment) Resolution 2013 and Stamp Duty (Amendments of Schedule) Order 2013, have also been approved.
Extensive work on the Omnibus Legislation was piloted by a Ministry appointed Incentives Working Group, comprising private and public sector stakeholders, and headed by noted economist, Dennis Morrison.
Dr. Phillips informed that the working group, along with Ministry officials, held extensive discussions with various stakeholders in the productive sector in concluding the final provisions proposed, and he thanked them for the work done.
Working Group Chairman, Dennis Morrison, also advised that Tax Administration Jamaica (TAJ) is scheduled to commence issuing technical notes outlining details of the legislation’s provisions, specifically targeting accountants and other such stakeholders, next week.