Minister of Foreign Affairs and Foreign Trade, Kamina Johnson Smith.
KINGSTON, Jamaica — The Senate on Thursday approved the Income Tax (Amendment) Act, 2022 to ensure compliance with international obligations.
Foreign Affairs and Trade Minister Kamina Johnson Smith, who spearheaded the legislation in the Upper House, said the bill accompanies the recently passed Special Economic Zone Amendment Act.
“The two pieces of legislation work together to ensure compliance with international tax transparency standards as well as to improve the efficiency of the administration of the regime,” she informed.
Johnson Smith, who is also the Leader of Government Affairs in the Senate, said the policy objective, as driven by the Department of Industry, Investment and Commerce, has always been to increase the capacity of production of the economy. She noted that the incentives provided in Special Economic Zones (SEZs) are designed to facilitate their contribution to nation building.
“Incentives are found in several tax laws, including the Income Tax Act. But it was brought to the attention of the government that there were instances where the policy was not clear or clearly articulated,” she pointed out.
Johnson Smith said that following further international reviews, it was determined that changes were needed for clarity, “and for SEZs to be consistent with our international obligations.”
“These changes were recently made and these changes … now ensure that the Income Tax Act is implemented consistently with this body of law,” she added. She underlined that the government seeks to improve the administration of the plan by removing the ambiguities raised.
“One of the main incentives provided by the Income Tax Act is the Employment Tax Credit (ETC), which allows business owners to claim an income tax credit payable for their contributions to the statutory deductions of their employees. But the entire legislation contains provisions that prohibit economic zone entities from claiming the benefit. This has been resolved and now the Income Tax Act Amendment will bring more clarity by widening the scope of the ETC to include companies falling under SEZA, to work in a cycle ensuring that ‘They support each other,’ she explained.
The Government Senator pointed out that clauses two and three allow for the insertion of the word “business” with respect to the application of the employment tax credit and the treatment of dividends in sections 32(a) and 38, respectively.
“This ensures that entities that offer business process outsourcing can operate in the zones and receive the benefits contemplated by SEZA and the Income Tax Act, when taken together,” a- she informed.