International Finance Companies (Income Tax Relief) Act

Link to law: http://www.moj.gov.jm/laws/international-finance-companies-income-tax-relief-act
Published: 1971-01-01

INTERNATIONAL FINANCE COMPANIES (INCOME T A X
RELIEF)

Ads
1 of 1971,

22 of 1975.

THE INTERNATIONAL FINANCE COMPANIES
(INCOME TAX RELIEF) ACT

[lst January, 1971 .I

1. This Act may be cited as the International Finance Shorttitle

2 . 4 1 ) In this Act-

Companies (Income Tax Relief) Act.
Intcrprela-
tion.

“approved company” means an international finance
company in relation to which. a certificate of
approval has been granted under section 3 and
remains in force;

“domestic operations” in relation to a company
means-

(a) the acquisition or’ rental of accommoda-
tion to be occupied and used by the
company for the purposes of its business
or to be used for the purpose of providing
living accommodation for employees or
officers of the company;

(b) the maintenance or’ disposal of such
accommodation ’& aforesaid;

(c) the provision of staff for the company;
(d) the provision of equipment and services

for use in such accommodation or by
such staff as aforesaid for the purposes
of the business of ‘the company;

(e) the provision of technical and professional
advice and services (including advice and
services as a director of the company) for
the purposes of the business of the com-
pany,



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2 INTERNATIONAL FINANCE COMPANIES (INCOME TAX
RELIEF)

(0 such other operations as may be pre-
scribed by the Minister by order;

“existing company” means a company which at the 1st
January, 1971, was entitled to any relief from
income tax pursuant to the International Business
Companies (Exemption from Income Tax) Law,
1956 (now repealed) and which, pursuant to the
provisions of any law, continues to be entitled to
such relief;

“financial transactions” means buying, selling, holding
or managing securities, accepting deposits, borrow-
ing money, lending money, placing deposits,
issuing guarantees, letters of credit and accept-
ances, underwriting, collecting and transmitting
funds, discounting, foreign exchange dealings
whether for immediate or future delivery, buying
of receivables and other obligations with or with-
out recourse, leasing of property, conducting trust
business and providing management consultant
services, buying, selling and dealing in bullion and
specie, and other like transactions normally carried
on by an international financial institution in the
ordinary course of its business;

“international finance company” means a body cor-
porate, whether incorporated under the law of
Jamaica or not, which is primarily engaged in
financial transactions and in the case of which all
of the following conditions are fulfilled-

(U) not less than 95% of the issued share
capital is held by persons not resident in
Jamaica, and no voting power in relation
to that percentage of such capital is exer-
cisable by a person resident in Jamaica
otherwise than as a nominee of persons
not so resident;

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1NTERNATlONAL FINANCE COMPANIES (INCOME TAX
RELIEF)

(b) not more than 5 % of the sums which,
on a liquidation thereof, would be receiv-
able by holders of share or loan capital
would be receivable by persons resident
in Jamaica;

(c) not more than 5 % of the assets which, on
a liquidation thereof, would be available
for distribution after the payment of
creditors would be receivable by persons
resident in Jamaica; and

(d, not more than 5 % of-
(i) the interest payable on its loans

and loan capital, if any; or
(ii) of the dividends payable on its

preference share capital, if any; or
(iii) of the dividends payable on its

share capital, if any, not being
preference share capital,

is receivable by persons resident in Jamaica;
“prescribed financial operations” has the meaning

attributed to it in subsection (1) of section 3;
“principal Act” means the Income Tax Act;
“securities” means shares, stock, bonds, notes, deben-

tures, debenture stock, units under a unit trust
scheme and any other securities prescribed by the
Minister for the purposes of this Act.

(2 ) Except as provided by subsection (11, any expres-
sion appearing in this Act which is defined in the principal
Act shall have the meaning assigned to that expression
by the principal Act, unless the context otherwise requires.

(3) No person having any financial interest in an
approved company shall be deemed for the purposes of
this Act to be a person resident in Jamaica by reason only

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4 INTERNATIONAL FINAhrCE COMPANIES (INCOME TAX
RELIEF)

of the fact that he visits Jamaica from time to time for
the purpose of supervising the operations of the approved
company or of attending meetings of shareholders or
directors of the approved company; nor shall the period
of any such visit be taken into account in determining
whether or not a person not ordinarily resident in Jamaica
has become resident in Jamaica.

(4) In relation to transactions between two or more
approved companies or an approved company and an
existing company, each such transaction shall be deemed
not to be a transaction with a person resident in Jamaica.

(5) For the purposes of this Act where one company
(hereinafter referred to as the “subsidiary company”) is a
subsidiary of another company (hereinafter referred to as
the “parent company”) the subsidiary company shall not
be regarded as having not less than 95% of its share
capital held by persons not resident in Jamaica unless all
of the following conditions are fulfilled-

(a) not less than 95% of the share capital of the
subsidiary company is registered in the name of,
and is beneficially owned by, the parent company,

(6) the parent company (not being an approved
company under this Act) is not itself resident in
Jamaica; and

(c) if the parent company-
(i) is itself the subsidiary of another company,

that other company (not being an approved
company under this Act) is not resident in
Jamaica; or

(ii) is itself one of a series of companies standing
in the relationship to each other of parent
and subsidiary company, none of the other
companies in the series, other than an
approved company under this Act, is
resident in Jamaica.

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Ih‘TERNATIONA L FINANCE COMPANIES (INCOME TAX 5
RELIEF)

3,-(1) Subject to subsection (2), the Minister may, on Powerof
the application of an international finance company. grant, grantoer-
in his discretion and subject to such terms and conditions approvalto
as he thinks fit. a certificate to the company designating it t:;z;afnan-
an approved company for the purposes of this Act in ciai,wm-
relation to such financial operations as may be described
in the certificate, in this Act referred to as “prescribed
financial operations”.

Minister to

tificale of

panlea.

(2) Notwithstanding anything to the confrary-
(a) an approved company which is either incorporated

under the law of Jamaica or resident in Jamaica
shall: if it effect any business transactions (other
than transactions relating to its domestic opera-
tions) with persons resident in Jamaica be deemed
to be acting in contravention of its certificate of
approval;

(6) an approved company which is not so incorporated
or resident may effect transactions relating to its
domestic operations with persons resident in
Jamaica and may also effect other business trans-
actions with persons resident in Jamaica but,
unless such other business transactions are pre-
scribed financial operations, nothing in this Act
shall relieve such other transactions of any liability
to income tax.

(3) An application for a certificate under subsection
( I ) shall be made in writing to the Minister in such form
and containing such particulars as may be prescribed.

(4) The Minister may, in relation to any application
under this section, require the applicant to furnish such
additional information as the Minister may consider
necessary or desirable to enable him to decide whether or
not to grant a certificate under this section.

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6 lNTERNATIOh7AL FINANCE COMPANIES (INCOME TAX
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CancellS.

ontifiFatsn.

4.-(1) Subject to subsection (2) and without prejudice
to the provisions of subsections (3) and (4) of section 5, a
certificate granted to an approved company under section
3 may-

(U) by instrument in writing issued by the Minister
and addressed to the company, be cancelled with
effect from such date (not being a date earlier than
six months after the date of the instrument) as the
Minister thinks fit;

(b) in accordance with an application made by the
company, be amended if the Minister thinks fit.

(2) The cancellation of a certificate pursuant to sub-
section (1) as respects any company shall not affect any
entitlement to relief from income tax which may have
accrued, in relation to that company, prior to the cancella-
tion.

tion of

Relief

iwome
5,--(1) Subject to subsection (3), an approved company

in Jamaica shall, so long as it remains an approved com-
pany, be relieved, in respect of its profits and gains arising
from its prescribed financial operations from the payment
of income tax, (including company profits tax, additional
company profits tax and investment company profits tax)
at the rates prescribed in the principal Act, and shall be
liable instead to pay income tax in relation to those opera-
tions at the rate of 2: per cenrum of the portion of its
chargeable income related to those operations for each year
of assessment.

(2) Tax payable in accordance with subsection (1)
shall be due and payable on or before the 15th day of
March in the year immediately following the year of assess-
ment for which the profits and gains are assessable.

(3) If the Minister, after consultation with the Com-
missioner of Taxpayer Audit and Assessment, is satisfied

from

tgx.

L.N.
16511999.

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INTERNATIONAL FINANCE COMPANIES (IAiCOME T A X
RELIEF)

that an approved co'm'pany has committed a breach of sub-
Fection (2) of section 3 or has knowingiy contravened, or
failed to comply with, any term or condition applicable to
that company under a certificate of approval he shall, sub-
ject to subsection (4). forthwith revoke the certificate of
approval-

(4) Before taking action under subsection (3) the
Minister shall give to the approved company an opportunity
to explain the circumstances of the breach, contravention
or failure aforesaid and, if he is satisfied that the company
had taken reasonable precautions to ensure that no such
breach, contravention or failure ociurs, he may, instead of
revoking the certificate, direct that the profit (if any)
resulting from the offending transaction or transactions
shall be subjected to income tax in Jamaica as if the
company were not an approved company.

certificate of approval under this Act shall forthwith be
notified in the Gazette.

6. The grant and any amendment or cancellation of a Publication
of grant,

and cancel-
lation of
certificate
of approval.

7 . 4 1 ) In lieu of tax at the rate specified in the principal Dividends
Act, income tax at the rate of 2+ per centurn shall, subject :&EL-
to the provisions of that Act, be levied and paid upon any z : ~ 2
dividend paid by an approved company resident in Jamaica
to a person not resident in Jamaica out of profits or gains
which are liable to income tax at a reduced rate in accord-
ance with subsection (1) of section 5. and-

(0) unless, pursuant to the first proviso to section 37
of that Act, the Commissioner of Taxpayer Audit L.N.
and Assessment otherwise authorizes, the company 16J/1999.
paying the dividend shall be entitled to deduct out
of the dividend and to retain the income tax pay-
able thereon in accordance with this subsection;

(h) where pursuant to the said proviso, the Commis-
sioner of Taxpayer Audit and Assessment ky; ,999,

.__
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8 INTERNATlONAL FINANCE COMPANIES (INCOME TAX
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authorizes the payment of the dividend without
deduction of tax the company may make a claim

L.N. to the Cammissioner of Inland Revenue for
the repayment to the company of the tax which
would, but for such authorization, have been
deducted from the dividend and retained by the
company.

(2) Notwithstanding anything to the contrary con-
tained in section 40 of the principal Act, or any other
provision of that Act. where, in relation to prescribed
financial operations, payment is made by an approved
company to a person who is not resident in Jamaica in
respect of any interest of money, royalty, annuity or other
payment to which section 40 of the principal Act applies
the company shall not be obliged to deduct thereout any
sum on account of income tax.

(3) Save as otherwise directed in this Act, the provi-
sions of the principal Act shall apply to dividends paid
by an approved company.

8. The Minister may make regulations for the following
purposes-

(a) providing for returns to be submitted and informa-
tion to be furnished for the purpose of an
application for a certificate of approval or for
claiming relief from income tax under this Act;

(b) prescribing the records to be kept and the returns
to be furnished by branches in Jamaica of
approved companies;

(c) prescribing other matters required by this Act to
be prescribed; and

(d generally for giving effect to the provisions of this
Act.

9. Except so far as this Act may operate to relieve an
approved company from liability to income tax (including

IhS / 1999.

Regulations.

Saving.

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INTERNATIONAL FINANCE COMPANIES (INCOME T A X
RELIEF)

company profits tax. additional company profits tax and
investment company profits tax) under the principal Act,
all the provisions of that Act which are applicable to a
company shall apply to an approved company.

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