Transitioning from FZ to SEZ – Frequently Asked Questions
SEZ Transition Frequently Asked Questions
- Why should my company transition?
Answer: Existing Free Zone companies are required to transition to the SEZ regime based on the Special Economic Zone Act. Since the passage of the SEZ Act and the repeal of the Jamaica Export Free Zone Act (August 2016) Free Zone companies’ fiscal benefits were automatically grandfathered. This grandfathering period ends on December 31, 2019.
- What is the transition timeline?
Answer: July 31, 2019 – All completed transition applications should be submitted
December 31, 2019 – Free Zone fiscal benefits end. If companies have not transition by this time, they have upon till June 2020 but they will not receive any incentives during this period.
- When should I submit my documents?
Answer: Transition applications should be submitted by July 31, 2019.
- What if I wish to retain my grandfathered free zone benefits until December 31, 2019?
Answer: You may retain your grandfathered Free Zone fiscal benefits until such time, but you are required to submit your transition application to the Authority by July 31, 2019. In this case your SEZ designation will not come into effect until January 1, 2020.
N.B. If your company is currently expanding, relocating or changing business activities, then you are required to transition now.
If your company is currently in breach of the SEZ Act then you will need to transition immediately.
- As an Occupant who do we submit our applications to?
Answer: The Occupant application is submitted through the Developer.
- When we transition will the occupant get a Gazette from the Authority or from the Developer?
Answer: In the Special Economic Zone regime, it is the Operating Certificate that gives a company access to the SEZ fiscal benefits. While a company will get a gazette which will come from the Authority to the Developer and then to you it is not what Jamaica Customs Agency, Tax Administration of Jamaica and other relevant organisations will use to give you your benefits. It is the operating certificate.
- What are the renewal requirements?
Answer: The Operating Certificate is renewed annually. The renewal process will require applicants to complete the renewal process, outlined below.
- What is the cost to transition?
The transition application fee is as follows:
- Developer (Single Entity) – US$3,000.00
- Occupant – US$1,500.00
- Zone User – US$100.00
This payment is due with the submission of your application. This may be done via wire transfer or manager’s cheque payable to the Jamaica Special Economic Zone Authority.
- If my developer doesn’t decide to transition until the last minute how will I as a transitioning occupant be affected?
Answer: The transition of the Occupant is affected by the transition of the Developer. The Developer must transition before the Occupant is able to do so. In order to ensure that business operations are not adversely affected we will facilitate discussions with Developers and Occupants in order to ensure that all entities are clear on the process.
Special Economic Zone Designation
- Is it possible to have a Single Entity Developer and a Developer on the same land?
Answer: No. The Single Entity Developer assumes the roles and responsibilities of a Developer, the Single Entity land and company are given designation. Recall that the Developer provides commercial SEZ real estate for rental to Occupants, this is a different and separate relationship from that which is had with the Single Entity. Also note that one parcel of land cannot have two Developers assigned to it.
- If persons want to transition from Approved Enterprise to Developer status, will they be required to submit a new application?
Answer: Yes, the company will be required to submit a new SEZ Developer application.
- Changing status – can an entity move from a single entity to a developer.
Answer: This question requires exploration of the specific business case. Remember that the Developer is, in effect, the landlord and therefore should only be engaged in providing commercial real estate as opposed to carrying out any other commercial activities. A Single Entity Developer is usual an operator doing activities such as such as manufacturing, business process outsourcing or logistics.
- In the case of relocation or expansion do they need to reapply?
Answer: There is a relocation and expansion process, so it is not a reapplication but an application to relocate or expand.
- What is a sub-concession agreement?
Answer: The purpose of this Agreement is to grant to the Occupant the right to maintain and operate the Business within the SEZ, for a certain duration of years under the terms and conditions described in both this Agreement and the Occupant Lease Agreement.
- Who are Zone Users?
Answer: Zone Users are companies that are located within the SEZ but do not have access to the SEZ incentives.
- What are the benefits provided for Zone Users?
Answer: The Zone User does not have access to the SEZ incentives, but the benefit from being in a strategic location, i.e. access to markets.
- Is it a requirement by the Authority for Zone Users to be a registered company?
Answer: Yes. A Zone User must be a company registered within Jamaica.
Reporting & Monitoring Requirements
- How does the Developer monitor activities being conducted by Occupants?
Answer: This is done via the Occupant reporting requirements and the Developers own internal procedures as it relates to monitoring of their Zone in keeping with the Developer’s SEZ responsibilities.
- How do SEZs file income taxes?
Answer: The process is completed online.
- How will JSEZA ensure that my documents are kept confidential?
Answer: As a part of the Government service we are bound by the strictures of confidentiality within the SEZ Act as well as per our staff orders.
Special Economic Zones and Customs
- If an entity wishes to dispose of goods and wishes to sell these items to staff at a reduced price, are Custom duties payable?
Answer: All applicable duties must be paid. Be guided by Section 23 of the Free Zone Act
- What would happen to goods that are in the bonded warehouse after December 31, 2019?
Answer: A submission is to be made to Customs by the entity setting out the situation. A detail account of the goods would have to be taken by my Officers and the relevant assessment made. Good can be exported. Goods that are unfit for sale or consumption, would have to be disposed of by the Entity. Where items of a nature can be transferred to the Queen’s Warehouse we could examine that possibility.
- Will all goods held in the warehouse and in transit incur tax and duties after January 1, 2020?
Answer: Goods held in the warehouse would be treated in accordance with question 2 above. As it relates to goods in transit the Minister will have to give directives accordingly