Income Tax Rate
Corporate Tax Rate
Sales Tax / GCT Rate
As a temporary measure, effective 1 January 2010, for a period up to March 2011, individuals earning income above J$5,000,000 annually will be charged the following increase of personal income tax:
Income Rate of Tax
0 - $441,168 nil
$441,169 - $5,000,000 25%
$5,000,001 - $10,000,000 27.5%
Above $10,000,000 35%
Previously, Jamaican residents were being taxed 25% on income above the exemption limit only (i.e. for income up to $441,169: nil, income above $441,169: 25%).
An individual who is resident, ordinarily resident and domiciled in Jamaica is subject to Income Tax on his worldwide income as it arises. Non-residents are subject to tax on income arising from Jamaica.
Residence is determined by physical presence in Jamaica for period of six months. Regular visits of substantial periods may make such visitor a resident, even though the stay is less than six months.
Broadly, an individual is domiciled in the country or state which he regards as his permanent home. He acquires a domicile of origin at birth normally that of his father and retains it until he acquires a new domicile of choice. To acquire a domicile of choice, a person must sever his ties with his domicile of origin and settle in another country with the clear intention of making it his permanent home.
A commonwealth citizen not ordinarily resident in Jamaica or any resident not domiciled in Jamaica is taxed on unearned income only to the extent that is remitted to Jamaica.
The Pay-As-You-Earn (PAYE) system of collection is in operation. The employers, who act as agent for the Commissioner of Income Tax, deduct tax from salaries, wages and other emoluments of employees and account for tax so deducted by the 14th day of the month following the period for which the deduction was made. Failure to do so will result in the employer being charged interest at 40% and a penalty of 50% of the sum payable from the day after the due date to the date of payment.
Self-employed individuals pay their taxes in advance by four quarterly instalments based either on the chargeable income of the previous year or their estimated chargeable income of the current year. The instalments are due on 15 March, 15 June, 15 September and 15 December. Any balance of tax is payable on filing of the Returns on the following 15 March. There is total exemption of emoluments paid to individuals who are suffering from a disabling permanent physical handicap or a disabling permanent mental handicap but are capable of being gainfully employed.
There is also exemption of J$45,000 from superannuation allowance or pension under either a statutory pension scheme or an approved retirement scheme. This is now increased to J$80,000 per annum from 1 July 2009.
Further, there is an old age allowance of J$45,000 to an individual who attained the age of 65 at any time during the year of assessment. This was increased to J$80,000 per annum from 1 July 2009.
The rate of tax on Jamaican companies is 33.3%. The tax year or 'year of assessment' is a period of 12 months commencing on 1 January in each year. Companies are assessed tax on their income which arises in the basis period and this normally coincides with the year of assessment. Where the company usually makes up its accounts for a period other than the calendar year, the Commissioner of Income Tax will allow this period to be substituted for the calendar year.
Jamaican resident companies are liable to income tax on all sources of non-exempt income wherever arising. A company is regarded as resident in Jamaica if its central management and control is located and exercised in Jamaica.
A non-resident company is taxed on income of a branch carrying on a trade or business in Jamaica, i.e. the income arises in Jamaica.
The company is expected to submit its Return by 15 March following the year of assessment and pay any balance of tax due. The company is required by law to make payment of tax based on the results of the preceding year (estimated tax). Payment of estimated tax is due in four equal instalments on 15 March, 15 June, 15 September and 15 December.
Any balance of tax is payable by the following 15 March when the Return is due for filing.
CAPITAL GAINS TAX
There is no Income Tax on capital gains secured on the disposal of capital assets. However, there is a transfer tax of 6% of gross consideration or market value when title passes.
Effective 1 June 2005, the transfer tax payable at death will be simplified and the rate reduced as follows:
(i) the first $100,000 value of the estate - no tax
(ii) balance over $100,000 - 7.5%.
BRANCH PROFIT TAX
Branches of non-resident corporation or companies doing business in Jamaica are taxed on the profits arising in Jamaica. The rate of tax is 33.3%.
Up to the end of December 1995, National Insurance (NIS) was payable on emoluments up to a maximum of J$31 per month and J$377 per annum at a rate of 2.5%. From 1 October 2003, maximum emoluments subject to NIS was increased to J$500,000 per annum at 2.5% (maximum J$12,500 per annum or J$1,042 per month). This compulsory deduction is made both by employer and employee and goes towards the provision of a pension at age 60 for women and 65 for men who have retired. If still employed, however, the NIS pension is deferred for a further period of five years or the date that employment ceased whichever is earlier.
National Housing Trust (NHT) is payable by the employee at 2% of taxable emoluments. The contributions together with any accrued bonus or interest are refundable to the contributor on an annual basis after seven years and fully on retirement. Note that the expatriate employee is refunded the full sum when he leaves the island. Self-employed persons pay NHT on 3% of chargeable income. Employer makes a like contribution of 3% of gross emoluments.
Similar to NHT, the education tax is payable at 2% of taxable emoluments. Contributions continue until age 65 years (men and women). Contributions are not refundable. Self-employed persons pay education tax at 3% of chargeable income. There is no age limit. Employer makes a like contribution of 3% of gross emoluments.
When the employer's payroll is J$86,667 annually or J$7,222 or more monthly, tax of 3% is made as a contribution to the National Training Program. Companies which provide training and employment for one or more participants are permitted to deduct the amount of remuneration for each participant of J$75 per week. Since 7 March 1994, the annual payroll limit has been increased to $173,328 or $14,444 monthly.
Custom fees, excise and stamp duties are imposed. Land is taxed on the unimproved value basis.
The Construction Industry and Tillage are subject to a levy of 2% of contract price payable to the Commissioner of Inland Revenue. This is treated as payment on account of tax liability of the payee but, if there is no liability or lesser liability to tax, the excess is not refundable nor can it be used to set off against any tax liability.
Accelerated depreciation is given to qualifying businesses in respect of machinery and plant in order to stimulate investment and production by way of tax relief. A special capital allowance of 100% of the capital expenditure over two years incurred by the qualifying business enterprise on the purchase of certain machinery will be granted
Stock and work-in-progress are valued at the lower of cost or market value on a 'first-in, first-out' (FIFO) basis.
In addition to the tax on the company's profits, a further tax is payable when any distribution or dividends are made. If distribution or dividends are made to another company, the rate of withholding is 33.3%. If, however, this is made to an individual, the rate is 25%.
The rate of withholding tax is modified if distributions are made to residents of double taxation treaty countries. The negotiated rates provided in the relevant articles are applicable. As of 1 April 2002, the rate of tax payable on dividend income derived from companies listed on the Jamaica Stock Exchange is nil.
As from 1st July 2009, dividends payable by resident unlisted companies to non-resident shareholders (individual and companies) are subject to tax at rates appropriate to them and the companies making such distributions are required to deduct tax due and account for it to the Inland Revenue Department.
Dividends and distributions made from profits which are relieved or exempt from tax by virtue of various incentives legislation would not be subject to tax unless they are, in fact, taxable in the country of the taxpayer's residence.
Capital distribution or capital dividends are not subject to income tax but are, however, subject to transfer tax (rate 7.5%).
Interest paid upon any money borrowed on capital employed in acquiring the income is deductible.
Losses sustained in a trade profession or business carried on in the Island or through the ownership or occupation of land situated on the Island are allowed as expenses in arriving at the chargeable income of the person sustaining the loss. The loss should not be a capital loss. The loss is available to be set off against other income arising in the year of assessment and may be carried forward indefinitely until fully written off.
As of 1 January 2006, losses may be carried forward for only five years instead of in perpetuity.
While losses arising from non-approved agricultural activity may be carried forward indefinitely, they are not available for set off against any other income.
FOREIGN SOURCE INCOME
Where the company is resident in Jamaica, i.e. its central management and control is situated in Jamaica, the income of such company wherever it arises is subject to tax in Jamaica. This includes:
(a) branch or agency profits from business outside Jamaica
(b) dividends, interest, royalties and rents outside Jamaica.
Various tax incentives are available to qualifying foreign and local investors to:
(a) facilitate industrial development
(b) exploit and develop local resources
(c) improve competitiveness of Jamaican international trade
(d) promote economic growth and provide employment and economic development.
FOREIGN TAX RELIEF
Unilateral relief by the credit method is granted to residents and non-residents against income tax payable in Jamaica on any income which is also subject to Commonwealth income tax. For residents of Jamaica, the maximum credit is one half of the Jamaican income tax rate, i.e. 16.67% in the case of corporations and 12.5% in the case of individuals.
If the Commonwealth income tax rate on the income concerned does not exceed half the Jamaican rate (16.67% and 12.5%), full relief is granted for the Commonwealth tax. Jamaican residents who are liable to pay Jamaican tax on income in respect of which United Kingdom tax is also payable are entitled to relief equal to the amount by which Jamaica tax exceeds half the rate of United Kingdom tax payable. If the Jamaican rate exceeds the United Kingdom rate, the relief is equal to half of the United Kingdom rate.
Unilateral relief is generally provided by way of deduction for taxes payable in other overseas territories.
Where a claim for double taxation relief is made under a treaty, the Jamaican income tax is reduced by the appropriate amount of the credit for foreign tax. The credit may not exceed tax at the Jamaican rate on the income concerned computed under Jamaican income tax principles, before any allowance of credit.
Tax liability in a group basis is not permissible. The liability of each company within the group is determined separately.
RELATED PARTY TRANSACTIONS
Related Party Transactions which are carried out for considerations not at arm's length and are intended to secure a benefit or tax advantage or to reduce the tax payable, are counteracted by the Commissioner, taking appropriate actions to negate this advantage.
See 'Dividends' above.
There are no exchange controls in Jamaica at this time.
General consumption tax (GCT) in Jamaica is generally imposed at the standard rate of 16.5% on the supply in Jamaica of goods or services by a 'registered taxpayer' and on the importation of goods or services by any person for consumption in Jamaica. It is proposed that with effect from 1st January 2010, the standard rate be increased to 17.5%.
A large number of goods and services are zero rated, which means that the supplier does not charge GCT (General consumption tax) on the supply but may credit GCT on incoming supplies against the tax chargeable on nonzero-rated supplies he makes. In addition, many goods and services are GCT exempt.
Certain goods are subject to special consumption tax (SCT) and not GCT. This is levied on the manufacture for sale in Jamaica and the import into Jamaica of prescribed goods such as petroleum products, cigarettes, spirits and beer.
Last Update: Nov 2010
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