JAMAICA launched into the purpose of changing into a world logistics hub with the launch of the worldwide logistics hub initiative in 2015. Nonetheless, to present itself a bonus in competing with different international locations, Jamaica carried out a variety of fiscal advantages to make potential buyers extra excited about Jamaica. Though there are different initiatives, this text will give attention to the Particular Financial Zones Act, 2016 (the “SEZA”), since its purpose is to draw new and various investments to the Jamaican economic system.
Particular financial zones (“SEZs”) are geographical areas designated by the minister that are aimed toward offering advantages to buyers to stimulate sustainable financial exercise.
Earlier than the SEZA, Jamaica had free zones below the Jamaica Export Free Zone Act. These free zones additionally offered fiscal advantages to what was then often called “promotors”. Nonetheless, when the SEZA got here into power, free zones had been progressively phased out, with free zone promoters being given the chance to enter into master-concession or licence-agreements with the Particular Financial Zone Authority (the “Authority”) inside a interval of 4 years from the appointed day.
One of many fundamental causes for this shift was to carry the nation into compliance with the World Commerce Group (“WTO”) Settlement on Export Subsidies and Countervailing Measures by 2015.
It’s Enterprise
SEZs are autos by means of which enterprise can turn out to be extra sustainable and extra worthwhile.
A number of the incentives offered below the SEZ regime are customs obligation reduction, revenue tax reduction (12.5 per cent on chargeable revenue), revenue tax reduction on earnings derived from the rental of property within the zone, stamp obligation and switch tax reduction.
It is very important word that an funding in an SEZ challenge can look totally different relying on whether or not you’re a sponsor, developer, occupant or zone consumer in a challenge.
A “developer” is outlined below the SEZA as an organization restricted by shares that’s integrated below the Corporations Act and is established by a sponsor for the aim of coming into right into a master-concession or a licence-agreement. Subsequently, a person can not turn out to be a developer below the SEZA however sponsors can incorporate an organization below the Corporations Act for the needs of building a SEZ. This might give a sponsor, who would basically be a shareholder within the firm, extra flexibility in deciding whether or not to be extra concerned within the building of the challenge or not. A “sponsor” is outlined by the SEZA as an investor or a consortium of buyers which proposes to supply shareholder capital to finance — immediately or not directly — the enterprise {that a} developer will undertake pursuant to a master-concession or a licence-agreement.
Topic to the prior approval of the minister, the Authority could enter into master-concession and licence-agreements. The principle distinction between these two agreements is that the land below the master-concession settlement is vested within the Authority because the registered proprietor or head lessee of the land, whereas the land below a licence-agreement is just not vested within the Authority because the registered proprietor or head lessee.
In both case, the settlement is between the Authority and the developer. In keeping with the SEZA, builders are liable for commencing operations and the agreed building programme of the zone at its personal price and expense. Builders are additionally tasked with managing, working and advertising and marketing the zone. Subsequently, the developer’s funding will go primarily in the direction of the development and construct out of the zone.
Builders can then enter sub-concessions with occupants for the usage of websites positioned within the zone. An “occupant” is an individual, aside from a developer of a zone or zone consumer, who conducts enterprise within the zone below a sub-concession between that particular person and the developer. Notably, these sub-concessions have to be in accordance with the master-concession or a licence-agreement held by the developer.
Acquiring a sub-concession below the master-concession or licence-agreement could also be useful to buyers. For example, the occupant is not going to doubtless should take care of the development section of the zone, moderately they’ll stay targeted on rising their enterprise in thezone whereas benefiting from fiscal incentives.
Occupants are given additional profit below the SEZA in order that if a master-concession is terminated early, the SEZA gives that occupants shall have the appropriate to proceed to function throughout the zone, in accordance with their sub-concessions, till such time as a brand new master-concession comes into impact or the zone is closed. Within the interim the Authority will assume duty for the administration and operation of the zone. This could present consolation for potential occupants in managing danger.
A zone consumer is an individual who performs actions or providers in a zone primarily based on authorisation obtained from the Authority.
The SEZA solely permits builders and occupants to learn from the fiscal incentives below the regime. Zone customers however could profit from different Authorities of Jamaica incentives.
A number of the anticipated coverage outcomes of the SEZ regime are to maintain linkages between the SEZ and the remainder of the economic system, to extend exports, and to supply aggressive incentives with internet advantages to the Jamaican society.
With the added advantages of being a developer or an occupant the SEZ framework gives many alternatives for enterprise in Jamaica and has made Jamaica a extra investor-friendly location, globally, to spend money on.
Joshua Guiness-Brown is an affiliate at Myers, Fletcher and Gordon and a member of the agency’s Industrial Division. He could also be contacted at Joshua.guiness-brown@mfg.com.jm or by means of the agency’s web site www.myersfletcher.com. This text is for common info functions solely and doesn’t represent authorized recommendation.
