House amends Income Tax Act

The House of Representatives on Tuesday (January 14) passed amendments to the Income Tax Act, codifying the revenue measures that were announced in the 2024/25 Budget.

Piloting the legislation, Minister of Finance and the Public Service, Fayval Williams, said with strong macroeconomic fundamentals, the government was able to introduce measures aimed at facilitating trade, reducing administrative inefficiencies and offsetting the loss in purchasing power to citizens as a result of global inflationary pressures.

“This government has been able to create some fiscal space through the progress made in improving the general macroeconomic conditions and reducing the country's debt. With the available space created and in keeping with the overarching policy agenda, the revenue measures introduced for financial year 2024/2025…aimed to further improve productivity by stimulating investments in renewable energies,” Williams said.

“The revenue measures also aimed to provide support for companies providing trust and corporate services, low-income earners and vulnerable groups such as pensioners. These efforts ensured that the most affected populations received targeted assistance reinforcing social equity,” she added.

Williams said by creating an enabling fiscal environment through these measures, the government is working to strengthen its economic framework while addressing social and environmental challenges.

She noted that this balanced approach underscores the government's commitment to fostering economic growth, reducing inequity, and building a more sustainable future.

Some of the tax revenue measures included raising the personal income tax threshold from $1.5 million to $1.7 million and announcing a reverse tax credit for all Jamaicans who earn under $3 million.

An increase in tax exemption benefits for pensioners was also announced, which resulted in an additional 2,046 persons falling outside the tax net and provided more disposable income to individuals in receipt of a pension.

In addition, the duty-free threshold for personal/household effects was increased from US$500 to US$1,000.

The government also increased the maximum participating voting share capital of companies listed on the Junior Stock Exchange from $500 million to $750 million, facilitated further investments in renewable energy, and clarified that trust and corporate service providers will continue to be assessed Corporate Income Tax at the rate of 25 per cent.

“Companies wishing to participate on the Junior Stock Exchange cannot have a voting equity capital exceeding $500 million. The current cap of $500 million was imposed to be consistent with the approximate size of medium-sized enterprises and the corresponding value of total sales revenue,” Williams said.

She noted that micro, small and medium-sized enterprises (MSMEs) listed on the Junior Stock Exchange benefit from a range of tax incentives, such as conditional relief from income tax payments, in addition to exemption from transfer tax and stamp duty on transfer shares over the exchange.

“I say to all Jamaicans, this Government is committed to facilitating further growth of the MSME sector and proposes this amendment to the Income Tax Act as a means of this support. The amendment will increase the cap on voting share equity capital from $500 million to $750 million.

“This is expected to positively impact the MSME sector, as it will broaden the scope for more MSMEs to benefit from the suite of incentives afforded to these entities,” she added.

The minister further stated that the increase will provide room for these entities to raise capital and improve productivity.

“This policy recognises the pivotal role that MSMEs play in driving economic growth while promoting and encouraging local entrepreneurship. It must be noted, however, that companies on the main Stock Exchange cannot and will not be able to move to the Junior Stock Exchange because of this increase in the cap. This policy applies only for new entrants to the stock exchange,” Williams said.

The Finance Minister also noted that at the end of December 2024, the market cap of the Junior market was $148.5 billion, while the market index, a mere 150 in 2009, is now at 3,735.

“So, if you had invested in 2009, how much money you would have right now? Companies on the Junior market have raised over $62.2 billion. As of December 2024, 48 companies were listed [and] two companies have transitioned to the main market, so that tells you how much those companies have grown.,”  Williams said.