BY BALFORD HENRY Senior Staff Reporter balfordh@jamaicaobserver.com
Monday, January 26, 2015
OPPOSITION spokesman on finance and planning Audley Shaw has raised concern about what he sees as “confusion” surrounding the promulgation of the Government’s competitive incentive scheme.
Shaw told Thursday’s Jamaica Stock Exchange (JSE) Investment & Capital Markets conference at the Jamaica Pegasus hotel in New Kingston that the latest example of what is causing the confusion stems from the tabling of the Special Economic Zones (SEZ) Green Paper in the House of Representatives recently by Industry, Investment and Commerce Minister Anthony Hylton.
He noted that the Green Paper suggested a range of incentives that would apply to SEZ investments, including: single uniform low/positive rates of corporate tax with a low CIT rate of 10-12.5 per cent on profits, 10 per cent withholding tax on dividends, full relief from customs duty (CET), customs fees, levies, stamp duties, additional stamp duty and GCT on transshipped supplies into the SEZ.
“But no sooner was this tabled in Parliament, the Ministry of Finance has warned the Ministry of Industry, Investment and Commerce, in a letter, that the Ministry of Finance has not yet signed off on the incentives regime, and it must await the White Paper before this is done,” Shaw said.
Hylton had told the House of Representatives on January 13 that Cabinet agreed to the tabling of the SEZ Green Paper, subject to a formal agreement with the finance ministry in relation to taxation and incentives.
The Green Paper states that the Ministry of Finance and Planning had no objection to it being tabled, as long as it was accepted that the tax incentives provisions hinge of four basic guiding principles:
(1) That the SEZ regime will focus less on fiscal incentives and more on providing a platform to deliver business and trade efficiencies, reliable, physical social infrastructure, and human resource capacity, et cetera;
(2) That where fiscal incentives are possible, they will not erode the domestic tax base and will not compete with the general tax regime;
(3) That tax and incentives will be “fit for purpose” and will not cause the country to give up more than it needs to in terms of lost revenue to the Government; and
(4) In support of Government’s overall thrust toward fiscal consolidation, there will be a deliberate shift from the Government-led free zone development, to a model that is private sector-led, or involves minimal Government involvement through public/private sector partnerships.
Shaw said that the upshot from the current situation was “total confusion”.
“This is simply not confidence-building at all,” the Opposition spokesman added.
SEZs are scheduled to replace free zones and are to be promoted and facilitated as a strategy to attract and retain targeted investments, “and catalyse and sustain economic activities across various sectors of the Jamaican economy”.
In February, 2014, Cabinet approved the development of the special economic zones policy framework as a critical element of the global logistics hub initiative which had been approved from September 2012.
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Shaw says Gov"t tax incentive scheme in confusion
