The Jamaica Special Economic Zone Authority (JSEZA) is urging companies operating under a free zone regime to transition towards a newly established special economic zone (SEZ) regime. The transition has to wrap up by December, the JSEZA wrote in an ad published on the Sunday Gleaner newspaper on April 7.
The measure follows up on the Special Economic Zones Act passed in 2016, which replaced a previous free zone law that had to be phased out to comply with international rules against exports subsidies.
Free zone operators, which currently pay no corporate tax, will be subject to a 12.5% corporate tax rate as they switch to an SEZ regime. There are no taxes on dividends and rental of property within the SEZ, and tax credits are issued against funds spent on research and development, up to a maximum 10% of taxable income.
At the same time, to access the tax incentives that are still available even under the SEZ regime, developers must have minimum paid-up capital of $1.5m, while the occupants of a designated SEZ must have $25,000 of paid-up capital. Besides, companies will have to pay a non-refundable fee of $3000 for developers and $1500 for other occupants to access the SEZ regime. From then onwards, SEZ companies will be required to pay an annual fee of $0.20 per square foot of building space and $0.05 for non-building space.