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When looking to move business operations overseas, it’s vital to ensure proper research has been done into overseas taxation. Each territory has its own way of taxing income, and you must make sure to comply with tax laws in any country in which you do business. This article will discuss some of the most important parts of Jamaica tax regulations and liabilities.
Contact us if you want to expand your business into Jamaica.
Jamaica taxes: personal responsibilities
As in most other countries, individuals are liable to pay personal income taxes as well as certain other Jamaica taxes depending on ownership of items such as housing or cars. We’re going to focus on the basics of salaried income for individuals, so be aware that there may be further complications for certain situations. Income tax is covered by the Jamaica tax on income act.
Who is taxed?
Jamaican residents and non-resident individuals are taxed on any Jamaican-sourced income. Whether Jamaica taxes them on international income is dependent on their residency status, as explained in further detail below.
What is the tax rate?
Individuals can expect to be subject to an income tax rate of 25% on taxable income up to $6 million JMD per year. That goes up to 30% on any taxable income beyond $6 million JMD per year. This applies to all income earned within the territory.
National vs. international income
All individuals are subject to taxes on Jamaican-sourced income, but only residents and domiciled individuals are taxed on worldwide income as well. Non-Jamaican residents are not taxed on foreign-sourced income.
Capital gains, exemptions & other considerations
The only personal deductions approved in Jamaica are social security and contributions to pensions. Additionally, there is currently no tax on capital gains in Jamaica. However, there is a transfer tax on the market value of certain assets transferred, including land, buildings, securities, and shares of real estate.
Jamaica corporate taxes
Here’s everything you need to know about corporate taxes in Jamaica. These apply to businesses and corporations of all sizes, although it may be worth checking specific details with chartered accountants. Serviap Global can help you find experts and professional specialists within the territory as part of our EOR services.
Who is taxed?
Any corporations residing in Jamaica are subject to taxes. Resident companies, which are companies owned and operated from Jamaica, are taxed on worldwide income. Non-resident companies with central management outside of Jamaica are only subject to taxes on Jamaican-sourced income.
What is the tax rate?
The current rates of income tax for corporations in Jamaica are as follows:
- 33.5% for all regulated companies
- 30% for building societies
- 25% for life assurance companies
- 25% for any unregulated companies.
A regulated company is any company regulated by the Bank of Jamaica, the Financial Services Commission, the Office of Utilities Regulation, or the Ministry of Finance. If the business does not fall under the jurisdiction of these offices, it is not considered to be a regulated company and is entitled to a lower corporate tax rate.
It’s important to note that income tax is only exercised at the national level; there are no locally applied income taxes in Jamaica, so only one filing is necessary. This makes things relatively easy to deal with and means you only have one moving part to consider in the process.
What is taxable income?
Taxable income is determined by income type in Jamaica, with each type being taxed at different rates. These income types include the following:
- Dividend income, subject to 15% tax rate
- Interest income, subject to 25% tax rate
- Royalty income
- Foreign income
- Inventory valuation
It makes sense to keep track of your different income sources for tax purposes. If you do not do this from the start, you are potentially creating yourself a much bigger problem down the line. As with so many tax-related issues, the more you can get right as a base the more you will benefit in the long run. This is especially important for rapidly growing companies.
Jamaica tax incentives & deductions
There are several deductions and tax credits available under the following legislations. We have selected the most commonly applicable, so if you operate in an unusual field you may wish to seek further advice to check if additional incentives may be of relevance to you.
- The Urban Renewal (Tax Relief) Act
- The Income Tax Act (Junior Stock Market Companies)
- The Income Tax Relief (Large-Scale Projects & Pioneer Industries) Act
- The Bauxite and Alumina Industries (Encouragement) Act
- The Charities Act
- The Special Economic Zones (SEZ) Act
These stack, so depending on the services and needs of your business, your corporation may be eligible for several deductions in your Jamaica tax liability. It makes sense to carefully consider the opportunities available to you for minimum tax concerns.
Jamaica taxes: VAT
Value-added taxes, better known as VAT taxes, are a common form of consumption tax. The value-added portion is the difference between a business’ sales and its cost of purchasing services or goods from another business. Here’s what you need to know about VAT taxes in Jamaica:
Who is taxed?
Any provider of services that needs goods and services imported from outside Jamaican territory is deemed liable for VAT. Many items are exempt from these VAT charges, including basic food items, prescription medicines, certain medical supplies, some construction services, and more.
What is the tax rate?
The standard rate for this type of Jamaica tax is 15%. Higher or lower rates of VAT are applicable depending on the goods and services imported. As with most countries, basic goods are exempted.
Is Jamaica right for your business?
SERVIAP is a leading Professional Employer Organization (PEO) ready to help your business with the challenges of international expansion. PEO is a model of co-employment, where we assume total responsibility for your talent, allowing you to focus on the strategic activities of your organization. Contact us today to learn more about how you can expand your business in Jamaica tax compliantly.
