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Jamaica - Taxation

Those who have the status of a Jamaican resident will find that all of their income regardless of origin is taxed if they earn more than 220,272 Jamaican dollars. If you are a non-resident you are only charged tax on monies earned in Jamaica. Residency is determined if an individual spends more than 183 days of the tax year in the country. There are a number of tax treaties in place which have the purpose of preventing residents from paying tax in more than one country on the same income. These treaties also mean that information can be shared between countries on the incomes of residents and non-residents, so nobody can use ‘non-residency’ to avoid paying tax anywhere.

When filing a tax return, a married couple are able to combine their income and file it under the name of the husband. Those who are in employment will find that their tax payments are deducted from their salary each month under the PAYE scheme. No-one on PAYE will need to file a tax return if they only have income from their work. Other income will have to be declared on a return. The tax year is the calendar year and returns must be filed and payments made shortly afterwards. There are penalties for late filing and non-payment of taxes, which are usually fines for those who are not persistent offenders, but regular non-payment can lead to charges of tax evasion and imprisonment. Returns can be filed online and payments can be made this way too.

Taxable income is classed as income from employment or business. Capital gains are only taxed if the state decides that the income qualifies as business income. There are a number of payments that are considered to be tax deductible though, and these include items such as pension payments, contributions to the National Insurance Scheme and any charitable donations. Those who are self employed can also claim back relevant work expenses, such as protective clothing or office equipment. Pensions can be no more than 10% of a worker’s salary and a charitable donation is to be no more than 5%. The tax rate in the country is 25% which is applied above the minimum earnings of 220,272 Jamaican dollars.

Stamp duty is payable in Jamaica and is taxed at different rates depending upon the type of transaction. The transfer of real estate is 4.5% and just 1% on the transfer of shares. These are calculated using the sales value of the property or shares. There is no capital acquisitions tax, although some transactions may qualify for a transfer tax.

Residents will also find that they have to pay a real property tax. This is payable annually and is paid by the person in possession of the property. This is a flat rate of JM$600 for properties worth up to JM$300,000 with 0.5% over that amount. There is no inheritance tax to pay, although some bequests may be considered to be standard income and if it takes you over the income tax allowance then you may have to pay tax on it. Wealth tax is another that does not apply in Jamaica which helps to make the country attractive to those expats who have large savings behind them.

Other deductions made from a worker’s salary include the social security contributions. Every employee pays 2.5% of their salary when they earn anything up to JM$500,000. The employer will also match this amount. Those who are self employed will have to pay the full 5% themselves.

VAT is payable in Jamaica in the form of General Consumption Tax, also known as GCT. This is applied to a number of goods and services, particularly those that are imported, which can make them seem to be expensive. The rate stands at 16.5% although many basic foodstuffs are exempt and some essential services will have a lower rate applied.

For further information on taxes that are payable in the country, the Taxpayer Audit and Assessment Department can be contacted by email or telephone. Forms and details on how to complete them can be downloaded from the website.

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