- The Senate on Friday, December 6, passed the Omnibus legislation which seeks to establish a transparent and coherent regime to govern all tax incentives.
- Minster of Justice, Senator Mark Golding, noted that the Omnibus legislation represents the most far reaching set of revisions of Jamaica’s tax incentive systems.
- He noted that a new tax incentive scheme is being designed to eliminate the existing sector based incentive programme and to transition to a generally competitive business tax regime.
The Senate on Friday, December 6, passed the Omnibus legislation which seeks to establish a transparent and coherent regime to govern all tax incentives.
The Bills passed are the Fiscal Incentives (Miscellaneous Provisions) Act; and the Income Tax Relief (Large Scale Projects and Pioneer Industries) Act 2013.
The Fiscal Incentives (Miscellaneous Provisions) Act 2013 sets out the reforms to be carried out to corporate tax 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.
In terms of the Income Tax Relief (Large-scale Projects and Pioneer Industries) Act, it sets out provision 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, were approved in the House of Representatives.
In his remarks, Minster of Justice, Senator Mark Golding, noted that the Omnibus legislation represents the most far reaching set of revisions of Jamaica’s tax incentive systems.
“The principal philosophy behind the Government’s tax reform in relation to incentives is based on the view that a comprehensive reform of Jamaica’s many tax incentive regimes requires implementation of a more accessible, broad based competitive tax regime, which can act both as a catalyst for investment and economic growth and which applies across all economic sectors,” Senator Golding said.
He noted that a new tax incentive scheme is being designed to eliminate the existing sector based incentive programme and to transition to a generally competitive business tax regime.
“The Jamaican economy has not been well served by the existing regime of sector based incentives. The consensus is that such incentives may have been partly responsible for Jamaica’s lacklustre record of growth by encouraging the misallocation of limited economic resources in our country,” Senator Golding said.
“The fundamental shift in policy direction calls for a general competitive regime of corporate taxation, in other words, one that provides broad base incentives for investments and employment creation,” he added.
He also explained that the Omnibus Tax legislation will ensure that an equitable rules-based system is created for all players within the industry and not just those who have “access to ministerial decision-makers.”
For her part, Senator Sophia Frazer-Binns welcomed the passage of the legislation. “I believe that the implementation of these legislations coupled with the tangible encouragement that the government has been giving to the Micro, Small and Medium-sized Enterprises, that we can only have and experience more growth and development so that generations to come will be much better off,” Senator Frazer Binns said.
Opposition Senator, Dr. Nigel Clarke noted that while the bill may improve on the current tax incentive system “it certainly does not transform” the tax system.
“The tax incentive regime is not complete until the administrative weakness and complexes are addressed,” he stated.
In his response, Senator Golding agreed that “there was more work to be done” to improve the system.
“We are working and I don’t think it’s helpful to make this particular legislative exercise as being the totality of tax reform whether of substantive tax law or of administrative issues. That is not what this is about. But it is a very major piece of the tax reform, the incentive system,” Senator Golding added.
The passage of the Bills 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.