nds are subject to transfer tax (see"Capital gains" above) at the rate of 7.5%.
DEDUCTIONS
Depreciation/Depreciation is generally computed on the reducing-balance basis over the useful life of the asset at specified rates. An election may be made for machinery and equipment to be depreciated at higher rates on the straight-line basis. Provision also exists for increased depreciation on machinery and equipment used for more than one shift in certain qualifying industries. Cain on depreciable property is taxed as
ordinary income, limited to the extent of the depreciation allowed.
As of year of assessment 1994, machinery and plant acquired by a "qualifying business" may be depreciated over two years instead of the estimated useful life of the asset. A qualifying business is one so designated by the Ministry of Industry.
Tax depreciation is not required to conform with book depreciation.
Net operating losses/Losses incurred may be carried forward indefinitely until fully utilized.
Payments to foreign affiliates/Royalties, management service fees and interest charges paid to foreign affiliates are deductible to the extent that these payments are made at arm's-length rates. Withholding tax should be paid in respect of all service payments, unless exempt under a treaty.
Taxes/Taxes on real estate from which income is derived are deductible.
Other significant items/Approved donations not exceeding 5% of taxable income to certain qualified charities and educational institutions are deductible.
GROUP TAXATION
Group taxation is not permitted.
TAX INCENTIVES
Inward investment/A number of incentive
laws grant certain approved industries relief from taxation for a specified number of years. The capital may be derived from either local or foreign sources. Tax relief is given to resident shareholders on dividends paid out of taxfree profits; relief to nonresident shareholders is generally limited to the applicable foreign tax rate. Nonresidents who place deposits with Jamaican banks may
earn interest free of Jamaican tax. The deposits may be designated in hard currency or Jamaican dollars.
Capital investment/Certain qualifying industries are able to write off, over a period of time, 120% of the cost of machinery and equipment, excluding private motor vehicles. Alternatively, a "qualifying business" that has been certified can get a special capital allowance permitting a write-off over two years for capital expenditure on new machinery.
Other incentives/The government introduced the Urban Renewal (Tax Relief) Act 1995 in an attempt to promote the improvement and restoration of areas suffering from blight or urban decay. Approved developers or organizations may obtain tax relief in connection with carrying out programs of development in specified areas declared by the Minister of Finance to be
special development areas, with a view to restoring these areas. Relief is available from income tax for interest paid to an investor in respect of an urban renewal bond, interest earned on loans issued by an approved organization, capital expenditure by a developer in relation to a National Monument, and rental income paid to an approved developer in respect of
the lease or rent of the improved property. In addition, a tax credit of 25% of capital expenditure incurred is available to a developer. Urban renewal bonds are exempt from stamp duty.
WITHHOLDING TAXES
The Jamaica Act refers to deduction at source and not to withholding, and the references below are to deduction at source. If it is proved that this
exceeds the tax actually payable, refunds are made.
DIVIDENDS(1)
SUBSTANTIAL
RECIPIENT PORTFOLIO HOLDINGS INTEREST(2,3) ROYALTIES
% % % %
Resident corporations……33 1/3 33 1/3 33 1/3 Nil
Resident individuals………25.0 25.0 &nbs
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