MAJOR DEVELOPMENTS
The Minister of Finance announced new tax measures for the 1996/97
financial year to simultaneously finance the gap between revenue and expenditure and to alleviate the tax burden of income earners at the lower end of the earnings scale. The significant changes include:
q Increase in the tax threshold from $50,544 to $80,496;
q Amendment to the computation of taxable benefit on accommodation provided by employers where the allowance is greater than the total other emoluments;
q Clarification of the meaning of contracts for services versus contracts of service;
q Taxation of interest accrued on financial instruments;
q Increase in insurable wage ceiling on which National Insurance Scheme contributions are calculated;
q Increase in the value of taxable benefits of a motor vehicle provided for the private use of an employee;
q Proposal to designate any area a free zone area approved by the relevant Minister for taxation purposes.
INCOME TAXES ON CORPORATIONS
1. Rates
The company income tax rate is 331/3%. In addition to any company profits tax, an additional income tax?is levied at the rate of 10% of chargeable income on any bank (licensed under the Banking Act) and any company accepting deposits (licensed under the Protection of Depositors Act).
Life insurance companies subject also to an income tax at 71/2% of chargeable income. Chargeable income is investment income less management expenses, which must be incurred in earning the income.
Life insurance companies also are subject to an income tax on their premium income of 11/2% for regionalized companies and 2% for non-regionalized companies.
The international finance company profits tax rate is 2.5%, which applies to a company primarily engaged in financial transactions and:
q At least 95% of the issued share capital is held by nonresidents of Jamaica;
q Not more than 5% of the assets on liquidation will be received by residents of Jamaica;
q Not more than 5% of the loan interest or dividends are received by residents of Jamaica.
q Foreign Sales Corporations (FSC). Designated corporations under the Foreign Sales Corporations Act are exempt from:
q Income tax with respect to income arising from foreign trade transactions, interest on loans or deposits, and other approved investment activity;
q The Human Employment and Resource Training Act (H.E.A.R.T.) (see item 25);
q Provisions of the Exchange Control Act relating to foreign trade transactions, interest on loans or deposits, and other approved investment activity;
q Customs duty, stamp duty, and retail sales tax on equipment, machinery, or materials imported to carry out foreign trade transactions, and such duties, consumption duty, or excise duty, that is paid or payable, are waived upon the purchase of Jamaican goods;
q Filing of Accounts and the Declaration of Assets and the payment of asset fees under the Companies Act.
Directors and employees of designated corporations, who are not ordinarily resident in Jamaica, shall be exempt from the National Housing Trust Act, any law relating to the education tax, and the National Insurance Act.
Nonresident shareholders of designated corporations shall be exempt from income tax with respect to dividends paid from tax-exempt income and any withholding tax required under the Income Tax Act.
2. Local Income Taxes
None.
3. Capital Gains Taxes
None (but see item 25).
4. Branch Profits Taxes
For taxes on remittances of branch profits, see item 28.
5. Foreign Tax Reliefs
By treaty (see item 19), Jamaican tax on foreign income may be reduced by a credit for foreign tax on that income. Such credit is allowed only if the taxpayer is resident in Jamaica for the relevant year of assessment. Relief is allowed for income tax chargeable in other Commonwealth countries of one-half the rate of Jamaican tax, if the other country allows similar relief. This applies regardless of treaty. Aside from the reliefs noted, there is no other relief from double taxation.
6. Classification of Corporations
None.
7. Payment of Taxes
Corporations are required to pay tax in four equal quarterly installments on a current-year basis, whereby the tax payable is computed on the previous year income. Quarterly payments are due on the fifteenth day of March, June, September, and December. The balance of the tax due is paid when filing the return on the following March 15.
Corporations that can establish that current profits are substantially less than the previous year
[1] [2] [3] [4] 下一页
