Work is being done to update the tax architecture, with “clear and coherent laws” capable of easy administration, says Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke.
Opening the 2022/23 Budget Debate in the House of Representatives on March 8, the Minister said this is integral to investment decisions and to provide a predictable business environment.
The Minister underscored that the laws being reformed will foster a sustainable path of development by creating a more equitable tax system, and leverage opportunities in a “global tax landscape”.
Dr. Clarke said revision of the Income Tax Act will be advanced in the coming months as part of measures for a “more responsible approach to tax expenditures, and the use of targeted tax credits rather than wholesale tax holidays”.
“As we aim to attract larger, US billion-dollar investments, it is imperative that we do so within prescribed structures which will ultimately safeguard our economic sustainability. The Act is intended to undergo a series of amendments which seek to create a coherent and self-contained legislative framework for the granting of fiscal incentives in respect of qualifying large-scale projects in a rules-based and transparent manner,” Minister Clarke said.
He said the tax reform policy ensures a system that reduces distortion, and consolidates four statutory deductions into one, while significantly increasing the ease of doing business in Jamaica.
The Minister outlined that effective May 2022, financial institutions will be required to submit information to Tax Administration Jamaica (TAJ), and exchange of information with relevant jurisdictions will begin in September 2022.
He said a search is on for a “suitable candidate” to lead the country’s Fiscal Commission, and a Commissioner will be appointed shortly.
He added that the entity will be the “guardian of Jamaica’s fiscal rules and will assist in nurturing an environment that is conducive to fiscal responsibility long into the future”.
Dr. Clarke pointed out that the objective of modernising the country’s economic structure is to ensure that “as we recover, we want to recover better than before”.
“The purpose of the reform agenda is to improve efficiency, transparency, and fairness, while providing the framework to accelerate economic growth and development,” the Minister said, adding that the Customs Act will be repealed and replaced.
He said the Act, which came into effect in 1942, will give way for a modern Customs Act that is consistent with international best practice, noting that a Bill for the replacement has been before a Joint Select Committee of Parliament and is now “substantially completed”.
Minister Clarke told the House that once the Parliament approves the Bill, Jamaica will have a brand-new Customs regime in the 2022/23 financial year that will “enhance productivity and efficiency of the Jamaican economy”.