The Special Economic Zone Act establishes a body to be known as the Special Economic Zone Authority (the Authority). The Authority is administered by a board of directors whose chairperson is to be appointed by the Minister. The Authority shall assist in implementing the policies and programmes of the Government with regard to SEZs and be responsible for, amongst other areas:
- Regulate and supervise SEZs
- Ensure the development and sustainability of Jamaica’s economy through SEZs
- Attract new and diverse investments in the Special Economic Zones
- Establish efficient investor and business facilitation one stop service
- Promote and market SEZs
|Special Economic Zone (SEZ) Regime||Jamaica Export Free Zone Regime|
|Exemption from border taxes|
|Exemption from Customs Administrative Fees (CAF)|
|Customs charges on sale into the domestic economy|
|General Consumption Tax (GCT) is NOT charged on locally purchased goods and services entering the zone, including electricity and telephone services||General Consumption Tax (GCT) was charged on the purchase of telecommunication services|
|Promotes two-way trade between zones and the rest of the local economy (i.e. to satisfy the World Trade Organization’s Agreement on Subsidies and Countervailing Measures and removes the previous export subsidy of the 15% cap on domestic sales), zero rate on sales into the zones||Export requirement of 85% and restricted interaction with the rest of the country in terms of the amount of manufactured goods that have to be exported|
|Countrywide zone development with industry clustering||Generally located in industrial areas or near ports or airports|
|Greater emphasis on private sector zone development and management||Primarily developed and operated by the government|
|Low headline Corporate Income Tax||No Corporate Income Tax|
|Managed by the SEZ Authority which has regulatory, facilitatory and promotional functions||Managed by the Free Zone Council|
|Value added services provided to SEZ users via the Jamaica Special Economic Zone Authority||Regulatory function provided via the Free Zone Council|
|Application with fees||Application with no fees|
|In addition to employment, the SEZ regime also incorporates development policy priorities such as FDI and value chain development with a focus on innovation, human resource development, rural development and green growth||Narrowly defined national development objectives|
|Corporate Income Tax Headline Rate of 12.5%
(possible effective rate of 7.5% with the approval of additional tax credits)
|Customs Duty Relief||√||√|
|Relief from Income Tax on Rental Income||√||√|
|GCT relief – on all goods & services entering the Zone||√||√|
|Employment Tax Credit||√||√|
|Promotional Tax Credit (R&D and training)||√||√|
|Stamp Duty Payable||50%||50%|
|Relief from Transfer Tax||√||X|
|Environmental Levy Payable||√||√|
*Kindly refer to the Special Economic Zone Act and Regulations as amended periodically
- Asset Tax Relief – A developer or an occupant of a Zone is exempt from tax under the Assets Tax (Specified Bodies) Act.
- Customs Duty Relief – (i) Goods imported into the Zone by a developer or an occupant shall be exempt from customs duties under the Customs Act. (ii) Goods imported into the customs territory by an importer on which customs duties are paid shall, if sold by the importer to a developer or an occupant in a Zone, be deemed to have been exported from the customs territory by the importer, and the provisions under the Customs Act in relation to obtaining a refund of customs duty upon the exportation of goods shall apply accordingly.
- Income Tax Relief – A developer or an occupant of a Zone shall enjoy the following relief for the purposes of the Income Tax Act, that is to say –
- As per the Income Tax Act section 30(1)(b) a 12.5% rate of tax on the chargeable income of the developer or occupant derived from the conduct of a trade, profession or vocation within the Zone;
- the developer or an occupant shall be exempt from the payment of income tax on profits derived from rentals of property in the Zone, except for any rental where the landlord (whether the developer or an occupant) and tenant are connected persons within the meaning of section 2(2) of the Income Tax Act;
- As per the Income Tax Act section 30(3)(b)(iii) where as 0% rate of tax on dividend income derived from shares held by the developer or occupant in another developer or occupant;
- As per the Income Tax Act section 32A of the Act shall apply to a developer and an occupant, however –
- rental income derived by the developer or the occupant from property in the Zone shall be treated as falling within subsection (4)(b) of that section; and
- subsections (10) and (11) of that section shall not apply to an occupant;
- subject to subparagraph (f), a promotional tax credit in an amount equal to the developer’s or occupant’s expenditure on research and development and training, up to a maximum which is equal to 10% of the tax on the developer’s or occupant’s chargeable income from a trade, profession or vocation within the Zone; and
- any amount of promotional tax credit that exceeds the limit set out in subparagraph (e) above in a year of assessment shall not be credited against tax payable in any other year of assessment and shall not be subject to a refund under the Income Tax Act.
Section 40(1A) of the Income tax Act shall apply as if the rate at which –
- the occupant shall deduct tax from distributions by way of dividends paid out of profits derived from the conduct of a trade, profession or vocation in the Zone, is 0%; and
- the developer shall deduct tax from distributions by way of dividends paid out of profits derived from non-exempt income from the conduct of a trade, profession or vocation in the Zone, is 0%.
The Minister in charge of Special Economic Zones (The Prime Minister and Minister of Economic Growth and Job Creation) shall, on recommendation by the Authority, and in consultation with the Minister of Finance declare, by notice in the Gazette, any area as SEZ. The declaration will define the limits, rules and regulations of the zone and will remain in force until revoked by an order in the Gazette by the Minister and on recommendation by the Authority
The types of SEZs established under the Act will include, General Zones and Specialised Zones as single-entity or multi-occupant Zones that will target industries and sector among others: business service parks, free port zones, airport zones, free trade zones, industrial parks, information communication technology parks, science and technology parks, agricultural zones etc.
Definitely! One of the major aims of the SEZ regime is to promote the growth of Jamaica’s economy. All companies conducting business in the SEZ as a Developer, Occupant, Zone User or MSME Occupant must be incorporated in Jamaica.
|Developer||Occupant||Zone User||MSME Occupant|
|Company incorporated under the Companies Act of Jamaica||Company incorporated under the Companies Act of Jamaica||Company incorporated under the Companies Act of Jamaica that has been authorized by the SEZ Authority to provide ancillary services, other services or goods to SEZ Occupants within the Zone.||Company limited by shares and incorporated under the Companies Act of Jamaica with|
|Established to develop and or operate an SEZ under a master-concession or licence-agreement as approved by the SEZ Authority||Conducts business in the SEZ under a sub-concession agreement with a developer and approved by the SEZ Authority||No benefits from SEZ fiscal incentives.||Conducts business in the SEZ under a sub-concession agreement with a developer and approved by the SEZ Authority|
|Approved to develop a Zone that is sufficient to accommodate at least three (3) SEZ Occupants or special approval as a Single-Entity Specialised Zone||Approved to operate from an approved SEZ with a Developers’ Sub Concession Agreement||Approved to operate from an approved SEZ with a Developers’ Sub Concession Agreement||Approved by the SEZ Authority based on evidence that the MSME conducts at least 50% of its business with an SEZ Developer or Occupant or has the capabilities to provide services or goods to an international market|
|Benefits from fiscal incentives||Benefits from fiscal incentives||Benefits from fiscal incentives with year on year proof of business|
|Issued or paid up share capital at the effective date of either a master-concession or licence-agreement must not be less than US$1,500,000||Issued or paid up share capital at the effective date of either a master-concession or licence-agreement must not be less than US$25,000. Also, investments by the Occupant in the Zone related activities I,e. equipment, machines, facilities improvement etc. must be greater than US$50,000 within the first year of operation||Investments by the Zone User in the Zone related activities I,e. equipment, machines, facilities improvement etc. must be greater than US$50,000 within the first year of operation||Investments by the Zone User in the Zone related activities I,e. equipment, machines, facilities improvement etc. must be greater than US$25,000 within the first year of operation for a valid period of not more than four (4) years from date of issuance.|
What is the application process for existing Free Zone entities (promoters and authorized enterprises) and first time SEZ Applicants?
All interested parties are invited to complete the registration form which may be requested via email at email@example.com or you may schedule an appointment with the JSEZA and a representative will be assigned to assist you with completing the documentation.
What responsibilities will the entities within the SEZs have with respect to environmental protection?
No, there is a restriction on such movement to mitigate against the erosion of Jamaica’s tax base for a period known as the Zone-establishment period. The Zone-establishment period is currently set at 10 years from the date the SEZ Act comes into force, however, the Minister may shorten or extend this time based on the level of zone development and protection of the Jamaican tax base.
(Note: Additionally, of import, is the fact that the Minister of Finance, after consultations with the Minister with responsibility for the Jamaica Special Economic Zone Authority may amend the negative list. The JSEZA, in consultation with the appropriate Ministries, Departments and Agencies, reserves the right to deny applications on the basis of public interest.)
Activities in the following industries are not allowed:
- Extractive industries
- Tourism services
- Telecommunication services
- Public utilities
- Financial services (regulated by the BOJ/FCS)
- Construction services
- Real estate and property management services
- Health services (excluding R&D)
- Catering services
- Retail trade