Jamaica targets tax reforms to ease business compliance burden

Prime Minister Dr Andrew Holness has announced that the government is taking steps to simplify tax structures to reduce the compliance burden on businesses, a move aimed at fostering sustainable economic growth.

Speaking at the Jamaica Stock Exchange’s 20th Regional Investments and Capital Markets Conference at the Jamaica Pegasus Hotel in Kingston, the prime minister highlighted several measures currently under consideration.

Among the key initiatives is the long-discussed consolidation of various payroll taxes into a single deduction system. Holness revealed that this system, initially introduced in 2007, is set for full implementation by January 2026.

“By [then], we should have a single social contribution payroll system established. We are well on our way to having it done,” he said, adding that the Tax Administration has been tasked with meeting an earlier deadline to ensure readiness.

The prime minister also outlined plans to incentivise Jamaican companies currently domiciled overseas to return their businesses to Jamaica. “We want to bring you back home, and we will make it very favourable for you to do so,” he said.

Consideration is being given to increasing the threshold at which small businesses are required to register and account for General Consumption Tax (GCT). The threshold, which was raised from $3 million to $10 million in 2019, may see another increase. “We are looking at a further increase to remove this burden from small businesses,” Holness noted.

Another proposed reform involves revamping the urban renewal tax credit. Holness said the government aims to enhance its effectiveness by restructuring its framework and expanding the geographical areas eligible for this incentive. “This will attract greater investments into underserved communities, transforming them into economic hubs,” he explained, citing the new Morant Bay Urban Centre in St. Thomas as an example.

To complement these efforts, Holness said tax credits will be created around urban spaces to spur investment. “If you’re looking for businesses [in which] to invest, the development of urban spaces is going to be the new game in town,” he said.

In addressing growth and wealth creation via the capital markets, Holness disclosed plans to reduce the tax rate on dividends, currently set at 25 percent. However, he refrained from providing further details on this initiative.

He also announced that the government will be divesting shares in key entities. The National Road Operating and Constructing Company (NROC) will divest 20 percent of its shareholding in TransJamaica Highway through a public offering, while the Port Authority will offload a percentage of its Business Process Outsourcing (BPO) assets in the coming months.

These initiatives are part of the government’s broader strategy to streamline tax administration, stimulate investment, and bolster economic growth in Jamaica.