Executive and immigration contacts
Juliette Brown
Yvonne Godfrey
Paula Deer Martin
+1 (876) 969-9000
Fax: +1 (876) 755-0413 Email: juliette.brown@jm.ey.com
+1 (876) 925-2501
Fax: +1 (876) 755-0413 Email: yvonne.godfrey@jm.ey.com
+1 (876) 925-2501
Fax: +1 (876) 755-0413 Email: paula.deer@jm.ey.com
A. Income tax
Who is liable. Individuals who are resident and domiciled in Jamaica are taxed on worldwide income. Individuals who are resident but not domiciled in Jamaica are generally taxed on their Jamaican-source income and on foreign-source income that is remitted to Jamaica. However, if the individual is present in Jamaica in a tax year for a total of three months or more, any foreign employment income that relates to work done in Jamaica or else where in relation to Jamaica, is subject to tax in Jamaica regardless of where it is received. Nonresidents are taxed only on Jamaicansource income and on remittances of foreign income to Jamaica.
In general, individuals are considered resident if they stay in Jamaica for six months or longer. Other factors that may be con sidered include whether they (or their spouses) have a place of abode available for their use in Jamaica, and if they habitually visit Jamaica for substantial periods. The tax authorities are likely to regard periods totaling three months as substantial and visits as habitual if the individual is present in Jamaica for approxi mately three months annually for four consecutive years.
For an individual who is in Jamaica for a temporary purpose only and not with an intent to establish residence, and who has not actually resided in Jamaica in any tax year for a period of six months (or periods aggregating to six months), income arising outside Jamaica is not subject to income tax in Jamaica.
All resident employees with annual income exceeding JMD1,500,096 for the 2021 tax year are subject to tax. Nonresidents are generally not eligible for the JMD1,500,096 exemption available to Jamaican residents. To benefit from the income tax threshold of JMD1,500,096, a person must be in Jamaica for 183 days or more in the tax year.
Nonresidents are subject to tax on all Jamaican-source employ ment income (unless specifically exempted under applicable
double tax treaty provisions). A nonresident employed by a resi dent employer is treated as resident from the first day of employment.
A nonresident employed in Jamaica by a foreign employer for less than three months is taxed on remittances to Jamaica only. However, if the employee performs the work over a period of three months or longer in the tax year he or she is taxable in Jamaica, regardless of whether the payment is received in Jamaica.
Income subject to tax. The taxation of various types of income is described below.
Employment income. All compensation arising in Jamaica or accruing to any person from an office or employment in Jamaica is subject to tax. This includes salaries, wages and bonuses. Bene fits in kind and allowances are taxable, but the Tax Commissioner may allow a portion to be exempt.
Accommodation supplied by an employer to an employee is a benefit that is fully taxable to the employee.
The taxable value of the personal-use portion of a company car is determined in accordance with the following table.
Cost of Value of car benefit motor vehicle
Up to five Over five Not years old years old Exceeding exceeding (a) (b) (a) (b) JMD JMD JMD JMD JMD JMD
0 300,000 40,000 48,000 30,000 36,000 300,000 700,000 50,000 60,000 40,000 48,000 700,000 1,000,000 75,000 80,000 60,000 65,000 1,000,000 1,500,000 90,000 100,000 72,000 80,000 1,500,000 120,000 140,000 98,000 100,000
(a) Up to 50% private use during the year. (b) More than 50% private use during the year.
Self-employment and business income. Residents are subject to tax on profits from self-employment and business activities as ordinary income at the rates described in Rates.
Investment income. Interest paid by specified entities (called “prescribed persons”) to individuals is subject to withholding tax at a rate of 25%. Prescribed persons include financial institutions, licensed securities dealers, life insurance companies, building societies, issuers of commercial paper, unit trust management companies, certain industrial and provident societies, the Ministry of Finance and certain other entities specified under the Income Tax Act.
Income tax of 15% is imposed on ordinary dividends paid by Jamaican resident companies to Jamaican resident shareholders, effective from 1 April 2013. Preference dividends paid to Jamaican residents that qualify for income tax deduction are subject to tax in the hands of the recipients. Ordinary dividends or preference dividends paid by Jamaican resident companies to nonresident individuals are subject to tax at a rate of 25% or at a lower rate prescribed by an applicable double tax treaty.
Directors’ fees. Directors’ fees are treated as taxable income for the tax year to which they relate and are subject to tax with other income at the rates described in Rates. Payments made to direc tors as directors’ fees by an employer fall in the category of emoluments (because these individuals are holders of office) and are consequently subject to deduction of income tax at the cur rent rate of 25%. If these directors are employed by the compa nies (organizations) for which they serve as board members, they are also subject to other statutory deductions.
Concessionary loans. Directors and employees who, by reason of their employment in a specified financial institution, receive concessionary loans (loans at a rate of interest lower than the prescribed rate), are taxable on the cash equivalent of the benefit of the loan, that is, the difference between the interest at the pre scribed rate and the interest actually paid at the concessionary rate.
Exempt income. If received from a superannuation or pension scheme approved by the Commissioner of Tax Administration Jamaica, lump-sum payments up to the prescribed limit specified by the Income Tax Act may be exempt from income tax. Lump sums paid from the government’s Consolidated Fund are not subject to income tax.
Individuals receiving a pension from an approved superannuation fund or from a pension or retirement scheme approved by the Tax Commissioner are exempt from tax on up to JMD80,000 of the income. The exemption is restricted to the lower of the pension income or JMD80,000 if the pensioner is under 55 years of age. Individuals 65 years of age and older enjoy an additional age exemption of JMD80,000.
Individuals classified as handicapped under the Income Tax Act are exempt from tax on all salary and pension income.
The above exemptions are available to both residents and non residents.
Resident self-employed individuals are entitled to an income tax exemption for the first JMD1,500,096 of their income. This exemption does not apply to nonresidents.
Capital gains. Jamaica does not impose tax on capital gains.
Taxation of employer-provided stock options. In practice, employerprovided stock options are taxable only at grant on the difference between the actual grant price and the market price at the grant date.
Deductions
Personal deductions and allowances. Pension contributions of up to 10% of an employee’s annual remuneration to approved pen sion schemes and contributions to the national insurance scheme are deductible for the employee. However, if an employer con tributes less than 10% of the employee’s annual remuneration, the employee may contribute the difference between the employer’s actual contribution and the maximum contribution payable by the employer (that is, 10%). The difference contributed by the employ ee is also deductible for income tax purposes.
Business deductions. All expenses incurred wholly and exclusively in producing self-employment or business income are deductible. In addition, individuals who are self-employed and who make chari table donations to charities may deduct these expenses, up to a maximum of 5% of taxable income.
Rates. A flat income tax rate of 25% applies to the annual statu tory income of individuals earning up to JMD6 million for the year. Individuals who earn annual statutory income over JMD6 million must pay an additional 5% tax on the statutory income in excess of JMD6 million. As a result, statutory income in excess of JMD6 million is subject to a 30% income tax rate instead of the 25% rate.
Withholding tax is levied on overseas payments that include, but are not limited to, management and technical service fees, dividends, interest, royalties, directors’ fees and insurance premiums.
Minimum business tax. The Minister of Finance and the Public Service, in his National Budget Presentation in March 2019, announced the abolishment of the Minimum Business Tax (MBT), effective from 1 April 2019.
Relief for losses. Tax losses from trading may be carried forward for offset against trading profits generated in subsequent years, but the tax losses that are deductible in any tax year may not exceed 50% of the aggregate amount of income of the taxpayer from all sources for that year, after allowing the appropriate deductions and exemptions. However, this limitation does not apply for the first five years of trade. It also does not apply if the taxpayer’s gross revenue from all sources for the relevant tax year is less than JMD10 million. No carryback is permitted.
B. Other taxes
Effective 1 April 2020, General Consumption Tax (GCT) is imposed on certain goods and services at a standard rate of 15%. Effective from 1 April 2019, any person who carries on a taxable activity and whose annual turnover exceeds JMD10 million must be registered as a “registered taxpayer” for GCT purposes. This threshold was JMD3 million before 1 April 2019.
Some goods and services that are zero-rated for GCT purposes, and others are exempt for GCT purposes.
GCT on imported services. Effective from June 2014, the reverse-charge mechanism applies to services that are supplied by nonresidents to persons resident in Jamaica (referred to as imported services).
The GCT applies to imported services if all of the following conditions are satisfied:
• The service is supplied by a nonresident to a resident of Jamaica.
• The service is intended to be or is used, consumed or enjoyed in Jamaica.
• The supply of the service would have been a taxable supply if it was made in Jamaica by a registered taxpayer in the course or furtherance of the taxpayer’s taxable activity.
If the above conditions are satisfied, the law requires the Jamaican recipient of the service to account for and report the 15% on top of the agreed invoice price for the services. If the recipient is a registered taxpayer that has taxable supplies for GCT purposes, the recipient may claim a GCT credit (for the applicable GCT) subject to any restrictions that are contained in the GCT Act.
The reverse-charge mechanism does not apply if the recipient of the service is an individual who uses the service for his or her private use.
Transfer tax. Although Jamaica has no estate tax, transfer tax is payable on the transfer or other disposal of Jamaican property and interests in or rights in or over property. For purposes of the transfer tax, property includes land, leases of land and shares in Jamaican companies. The following are the rates of transfer tax.
Rate (%)
Transfer by an individual while alive 2*
Transfer on death
On the first JMD10 million 0*
On the balance 1.5
* Effective from 1 April 2019, the transfer tax rate applicable to property transfers (land and shares) was reduced from 5% to 2%. Also, the transfer tax threshold applicable to the estate of deceased persons increased from JMD100,000 to JMD10 million.
Wills are probated in accordance with the laws of the country of domicile of the deceased, and real property is transferred accord ing to the laws of the country where the property is located.
Stamp duty. If a mortgage is refinanced for an equal or lesser amount, stamp duty is payable at a rate of JMD100. If the refi nancing is for a greater amount than the original amount, a stamp duty rate of 1.25 cents per JMD200 or part thereof applies to the additional amount secured (the difference between the refinanced amount and the original amount secured). Effective from 1 April 2019, the ad valorem stamp duty applicable to certain transac tions was removed, and a flat rate of stamp duty was introduced. In particular, the ad valorem stamp duty that was imposed on documents and documented transactions was replaced by a flat rate of JMD100 per document or parcel relating to transactions valued below JMD500,000 and JMD5,000 per document or par cel relating to transactions valued at JMD500,000 or more. The flat rate applies to the transfer or other disposal of shares and real estate.
Withholding tax on specified services. Effective from 1 September 2015, recipients of specified services (as defined in the legisla tion) are required to withhold a 3% tax from payments made to suppliers of these services. The tax must be withheld in either of the following circumstances:
• The gross payment relates to a single transaction with an invoice value of JMD50,000 or more (before application of GCT).
• A series of gross payments of less than JMD50,000 (before GCT) aggregating to JMD100,000 or more are made to the same service provider in a 30-day period.
For the tax year in which the tax is withheld, the service provider from whom the tax is withheld may claim a tax credit for the withholding tax against any quarterly income tax obligation or tax due in the annual income tax return. Any excess credit for that tax year may be claimed as a refund or carried forward to be used in a future tax year.
Tax compliant service providers can apply for an Exemption Certificate from Tax Administration Jamaica that allows them to benefit from an exemption from the 3% withholding tax. This would exempt persons who make payments to them in relation to the specified services from withholding the tax.
C. Social security
Contributions. The applicable social security contributions and other payroll taxes are described in the following paragraphs.
Until 31 March 2020, the National Insurance Scheme (NIS) rates were 5.5% for employed and self-employed workers, other than domestic workers, on annual earnings of up to JMD1,500,000. For employees, the 5.5% was payable one-half by the employee and one-half by the employer. For domestic workers, the employer and the employee each paid JMD100 a week. Effective from 1 April 2020, the Ministry of Labour and Social Security announced an increase in the NIS rate from 2.75% each (employer and employee) to 6% (employer pays 3% and employee pays 3%). However, the maximum annual insurable wage ceiling of JMD1,500,000 remained in effect. In addition, the contribution rate for domestic workers was increased from JMD150 to JMD200 per week, effective from 1 January 2020. Effective 1 April 2021, the maximum insurable wage ceiling was increased from JMD1,500,000 per year to JMD3 million per year. These contributions are mandatory. The maximum insurable wage ceiling is expected to further increase (from JMD3 million) to JMD5 million, effective 1 April 2022. The NIS rate is expected to remain at 6%.
National Housing Trust contributions are made at a rate of 5% of salary, borne 2% by the employee and 3% by the employer. Selfemployed persons contribute at a rate of 3% of gross taxable income. Contributions by employees and self-employed persons, together with a bonus, are refundable to the contributor on an annual basis after seven years of contribution or in full after retirement at 65 years of age.
An Education Tax is payable at a rate of 5.75% of salary, borne 2.25% by the employee and 3.5% by the employer. Self-employed persons are subject to Education Tax at a rate of 2.25% of net taxable income (after deduction of pension and NIS contributions).
Totalization agreements. To prevent double social security taxes and to assure benefit coverage, Jamaica has entered into totaliza tion agreements with Antigua and Barbuda, Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Guyana, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago and the United Kingdom.
For purposes of the UK totalization agreement, the United Kingdom is defined to include Alderney, the Channel Islands of
Guernsey, Herm, Jersey and Jethou, England, the Isle of Man, Northern Ireland, Scotland and Wales.
D. Tax filing and payment procedures
The income tax year in Jamaica is the calendar year. The relevant payroll taxes (income tax, national insurance contributions, education tax and national housing trust contributions) are required to be withheld by employers from the wages of employ ees monthly under the Pay-As-You-Earn (PAYE) system. Taxes withheld must be paid to the Collector of Taxes by the 14th day of the following month or the last working day before the 14th of the month if the 14th falls on a weekend. The Jamaican govern ment has proposed that all employees be required to file income tax returns. However, this change will be implemented in phases. If required, annual income tax returns must be filed, and the final income tax paid, by 15 March following the tax year.
Nonresident employees must file tax returns if requested by the Tax Commissioner or if tax is overpaid and a refund is requested. Nonresident self-employed persons who engage in business in Jamaica must file tax returns.
To prevent double taxation of the income, an individual may obtain a tax credit in Jamaica if tax is deducted at source from investment income. Prescribed persons such as banks and other financial institutions as described by the Income Tax Act normally with hold tax at a rate of 25% from investment income.
E. Double tax relief and tax treaties
Jamaica has entered into double tax treaties with Canada, China Mainland, Denmark, France, Germany, Israel, Japan, Mexico, Norway, Spain, Sweden, Switzerland, the United Kingdom, the United States and CARICOM nations (Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago are signatories to this treaty). These treaties generally provide for reduced rates of withholding tax on dividends, interest, royalties, and technical or management fees.
In January 2018, Jamaica signed a double tax treaty with Italy, which was ratified on 5 August 2020.
F. Temporary visas
Foreign nationals from certain specified countries may visit Jamaica without a visa depending on the landing options avail able to them. The specified countries are the CARICOM member states and British Commonwealth countries except for the British Virgin Islands, the Cayman Islands, Nigeria, Pakistan and Sri Lanka. A visa is required for all foreign nationals coming to Jamaica to work except for CARICOM member states and British Commonwealth countries specified above. As a result of COVID-19 pandemic measures, all foreign nationals traveling to Jamaica are also required to obtain pre-authorization for entry at the www.visitjamaica.com web site.
G. Work permits and self-employment
The right to work in Jamaica is relatively restricted. The Ministry of Labour and Social Security and the Ministry of National Security are responsible for ensuring that employment opportuni ties are made available to Jamaican citizens and permanent resi dents before being offered to foreign nationals.
Foreign nationals coming to Jamaica to work are required to have both valid work permits and visas if they are not citizens from specified CARICOM and British Commonwealth countries. Work permit exemptions may be available to citizens from CARICOM member states who have obtained CARICOM Skills Certificates. Foreign nationals married to Jamaican citizens may also obtain Marriage Exemption Certificates from the Ministry of Labour and Social Security to obtain exemption from work permit requirements. If a work permit exemption is obtained, a visa is then required for foreign nationals who are not British Commonwealth or CARICOM citizens.
No legal restriction is imposed on the employment of foreign nationals in Jamaica. However, the Work Permit Review Board must be satisfied that the category of employment for which application is made is not available locally.
The duration of the work permit period can be based on the employment contract and may be granted for a maximum of three years. Work permits are renewable but are not transferable. The Ministry of Labour and Social Security requires 8 to 12 weeks to process a work permit application. The Ministry of National Security requires three working days to process a resident permit and a visa.
The work permit process requires the Jamaican employer to sub mit the work permit application on behalf of the foreign national to the Ministry of Labour and Social Security prior to the nation al commencing an assignment in Jamaica. If approval is granted, the foreign national, depending on his or her nationality, must apply to a Jamaican consulate abroad to obtain a visa before arriving in Jamaica. An application to the Immigration Department and the Ministry of National Security must be com pleted to register the foreign national for employment in Jamaica, on arrival.
A self-employed person must apply to the Ministry of Labour and Social Security for a work permit and then apply to the immi gration department of the Ministry of National Security for a visa and registration.
H. Residence permits
Spouses and children are dependents of a work permit holder, and an application for temporary residence must be submitted to the Immigration Services, Ministry of National Security for spouses and children under 16 years old. Children who are 16 or older and who are students must obtain students’ visas.
An alien registration is also required for foreign nationals (nonBritish Commonwealth and CARICOM citizens) over 16 years old whose stay in Jamaica exceeds six months.
I. Family and personal considerations
Family members. A foreign national married to a Jamaican citizen or person born in Jamaica may be exempt from the requirement for a work permit. All other family members, however, must obtain work permits.
Marital property regime. The Family Property (Rights of Spouses) Act recognizes the union of a single man and single woman who have lived together continuously for a five-year period. The act grants the same property rights to common law unions as those granted to married couples.
Driver’s permits. Foreign nationals may drive legally in Jamaica using their home-country driver’s licenses for up to one year. Jamaica has driver’s license reciprocity with the United States and most British Commonwealth countries. To obtain a local Jamaican driver’s license, an applicant is required to take a writ ten examination and a road test.