The Jamaica Business Development Corporation (JBDC) ‘stands on business’, moving Micro, Small & Medium-sized Enterprises (MSMEs) ‘From Concept to Market’. Have you filed your tax returns? We are inching closer to March 15, the final day for filing Annual Income Tax Returns. And of course, the Entrepreneur Weekly will be continuing its focus on tax.
The Government of Jamaica has made significant strides to support MSMEs, which in return contributes heavily to economic health. According to the 2018 MSME & Entrepreneurship Policy, “It is estimated that the MSME sector accounts for over 80% of jobs in Jamaica, the majority of these jobs are created by one-person enterprises as almost 40% of working Jamaicans are self-employed.”
Jamaica’s business environment seeks to enable the development of a flourishing MSME sector. As such, there are systems in place that reduce the MSMEs’ tax payments.
- Productive Inputs Relief (PIR)
The Productive Inputs Relief (PIR) scheme aims to reduce the tax burden on MSMEs by allowing them to access essential inputs for their business activities at a reduced cost. This initiative enables MSMEs to enhance their productivity and competitiveness in the market.
Through the PIR system, the agriculture, manufacturing, tourism, healthcare, and the creative industries are being targeted. Companies operating in Jamaica can benefit from wide-ranging incentives, which are applied at two main stages – import duty and income tax relief.
According to the Ministry of Industry, Investment & Commerce (MIIC), these incorporate, among other things, relief on Customs Import Duties, normally charged when importing goods into the country; additional Stamp Duties, usually applied at the port on certain products; and Corporate Income Tax, generally levied on the profit income of businesses.
- Income Tax Credit
Entrepreneurs operating MSMEs can benefit from an Income Tax Credit, which provides relief by allowing them to deduct a certain amount from their taxable income. The Jamaican Senate passed a bill to facilitate a $375,000 income tax credit specifically designed to support MSMEs. The Government is seeking to ensure that sufficient assistance and stimulus is provided while encouraging formalisation.
- Employment Tax Credit
The Employment Tax Credit (ETC) is designed to benefit tax-compliant employers. Employers who comply with their obligations will preserve and maintain their employees’ benefits under important national programs such as National Housing Trust (NHT) and National Insurance Scheme (NIS) while reducing the effective rate of income tax borne on their active trading activities. The ETC seeks to: reduce labour cost; increase after – tax profit; and lower the effective rate of Income Tax.
- Minimum Business Tax
The payment of a Minimum Business Tax of J$60,000 annually has been abolished under a bill tabled in the House of Parliament. The Bill, entitled: An Act to Repeal the Minimum Business Tax Act, 2019, removed the minimum business tax which was implemented in April 2014. In making the announcement on November 29, 2019, Senator Kamina Johnson Smith said the Act removes one more hurdle “from growing from the informality of the “hustle” which we respect, but allows those who want, to grow from the hustle into prosperous business men and women. Removal of this tax is one of the steps which will assist”.
- Special Economic Zone (SEZ) Benefits
Special Economic Zones (SEZs) offer a range of tax incentives and benefits to businesses operating within designated zones. These incentives include tax holidays, duty-free importation of goods, and streamlined customs procedures. Entrepreneurs can leverage SEZs to reduce operational costs and enhance their competitiveness in both local and international markets.
Myers & Fletcher Attorney – at – Law’s website says, “Where applicable, the SEZ benefits result in an income tax rate of 12.5%, which is significantly lower than the normal rate and which can be further reduced to 7.5% with the application of certain employment tax credits. In addition, the SEZ benefits result in no withholding tax on the repatriated profits from Jamaica, no customs duty or general consumption tax (GCT) on the import of equipment, GCT relief on certain goods and services entering the SEZs, and refund of customs duties upon the exportation of goods from Jamaica.”
- Tax Exemption for Junior Stock Market Listing
Entrepreneurs looking to raise capital for their business can consider listing on the Junior Stock Market. Companies listed on this market are eligible for tax exemptions, including corporate income tax and capital gains tax, for a specified period. This incentive encourages entrepreneurship and investment in Jamaica’s growing business landscape.
This list is by no means exhaustive. Ensure you do your research to stay on top of measures implemented by the government for your business to thrive.
JBDC – PARTNERSHIPS FOR ENTREPRENEURIAL SUCCESS
Understanding and leveraging these tax incentives can significantly benefit entrepreneurs and contribute to the growth and sustainability of MSMEs. The JBDC has partnered with agencies like the Tax Administration of Jamaica (TAJ) to ensure that this tax season, you are in the know. Be sure to follow us, so you never miss a workshop or event. By taking advantage of these opportunities, entrepreneurs can mitigate tax liabilities and reinvest savings into expanding their businesses. Learn more by becoming a JBDC client today. Visit www.jbdc.net.
