Israel – Jamaica Tax Treaty

Business Activity in Jamaica

Jamaica is the leading business destination in the English-speaking Caribbean. The country takes pride in its key sectors, characterized by positive experiences for the investors and inspiring success stories. The country continues to welcome investors from around the world. Its friendly business climate and growing economy have contributed to the success of numerous multinational, medium, and small businesses.

Jamaica, notably, is known as the leading outsourcing destination in the English-speaking Caribbean wherein it has secured its strong position in the Global Digital Services through its location, talent, and business-friendly environment. The Information and Communications Technology/Business Process Outsourcing sector which provided with a revenue of US$900 million in 2022, witnessed significant growth, with expansions, new brands, and advanced services. It now employs about 60,000 people, with major global companies like Alorica, Teleperformance, and Vistaprint continuing to invest in Jamaica.

Bilateral Agreements Between Jamaica and Israel

• Double Taxation Agreement

Convention of the Prevention of Double Taxation

The agreement between the governments of Israel and Jamaica regarding the avoidance of double taxation was signed on June 28, 1984 and entered into force on December 31, 1985.

To read the agreement in English, click here.

Applicability of the MLI

Both Jamaica and Israel have signed the “Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting” (MLI). Israel signed the agreement on June 7, 2017, and ratified it on September 13, 2018. In contrast, Jamaica signed the MLI on January 24, 2018, and is currently in the process of ratification.

Residency for Tax Purposes in Jamaica

Residence of an individual

A person can be classified as a tax resident in Jamaica under any of the following circumstances:

• They stay in Jamaica for a minimum of six months during the year – either for tourism or some other reason.
• They (or their wives) have a home on the island and come anytime in the tax year, though it may be for a couple of days only.
• They regularly visit Jamaica for substantial periods. Generally, visits totaling three months or occurring over four consecutive years are considered substantial and habitual by the Commissioner General, Tax Administration Jamaica.

Residency of a Company

A corporation is considered a resident of Jamaica if its central management and control are based there. This typically means that board and shareholder meetings occur in Jamaica.

The Tax System in Jamaica

The Jamaican tax authority is called Tax Administration Jamaica

Income taxation: 0%, 25%, 30%

Taxation of companies: 25%

VAT: 15%

Withholding tax

Inheritance Tax and Estate Tax in Jamaica

There is no inheritance tax in Jamaica. However, a 1.5% transfer tax applies to estates valued over JMD 10,000,000 upon death.

Relocation to Jamaica

Jamaica offers benefits and favorable policies for foreign investors who wish to invest in the country. Among the thriving economy sectors, the following are distinguishable:

Jamaica’s energy industry – has now been the target of worldwide attention, having attracted many private and public investors. With over 10 energy producers, the country is working on developing its solar energy, wind, hydropower, and bagasse energy along with petroleum methods. The government aims to have at least 30% of its energy from renewables by 2030. The Office of Utilities Regulation (OUR) oversees the industry, ensuring a fair and transparent energy framework for all stakeholders.

Jamaica is an excellent place for agribusiness- The growing global demand for Jamaican fresh produce, a large local market (including over 4 million tourists annually), and its proximity to key export markets make it a profitable sector. With 4,440,000 hectares of agricultural land, a variety of premium crops, and active animal husbandry, fish farming, and food manufacturing, Jamaica’s agribusiness sector offers great opportunities for investors. Discover more about what Jamaica’s agribusiness has to offer.

Jamaica’s logistics and infrastructure sectors – are seen as key to the country’s economic future. The expansion of the Panama Canal has changed global maritime trade and brought new commercial opportunities to Jamaica. The country is now concentrating on gaining as much power as the major logistics players of the world in the logistics industry. The objective of Jamaica is to be an interconnected global supply chain, along with Rotterdam, Dubai, and Singapore.

Real Estate Taxation in Jamaica

In Jamaica, property tax is computed depending on the land’s “site value” or “unimproved value,” per the 2013 Property Valuation Roll. It is calculated applying different value bands with rates varying from 0.50% to 0.90%.

A 2% transfer tax applies to the value of land, buildings, securities, and shares when they are transferred. If the tax exceeds 37.5% of the capital gain, a refund is available. However, listed securities traded on the Jamaica Stock Exchange (including the Junior Stock Exchange) are exempt from this tax.

Transfer of funds from Israel to Jamaica

According to section 170(a) of the Israeli Income Tax Ordinance, any transfer of payment to a non-Israeli resident is subject to a 25% withholding tax. The tax authority may allow, under certain circumstances, a reduction or dismissal of the withholding tax. Our firm handles withholding tax matters with the Israeli Tax Authority.

Since both countries have a tax treaty, one can submit a declaration form (statement regarding a payment to a foreign resident that is exempt from withholding tax), and under certain circumstances, it is possible to transfer the payment without the withholding tax and the approval of the Tax Authority.

In providing advice regarding the transfer of money abroad, in addition to the issue of withholding tax, our firm handles the requirements of foreign banks, such as an accountant’s approval regarding the payment of taxes, and examines additional actions required in light of the uniform standard of CRS between the countries –automatic exchange of information between countries which is carried out first through the banks and then between the tax authorities of each two countries.

Banks raise many difficulties and charge high fees for converting shekels into other currencies, so it is important to consult before transferring the funds – Contact us.

For more information on money transfers abroad click here.

Types of Business Entities in Jamaica

Limited Liability Company

To establish a limited liability company in Jamaica is required at least one director and one shareholder, and the individuals can be from any country. The company will however require at least US$1 as its paid-up share capital. Also, a company secretary must be appointed. A limited liability company is required to also have a registered auditor for an annual audit. The company is then, after the formation, to keep a company registered office in Jamaica and to keep statutory and accounting records there.

General Partnership

This type of legal entity is established with at least two owners, who bring together skills, knowledge, and connections. Each partner shares equal responsibility for the management and operations of the business, as well as liability for debts and obligations. It’s simple to set up, and instead of paying income tax as a business, profits and losses are reported on each partner’s tax return. Raising funds is easier, and employees may feel more motivated if they have the chance to become a partner. It’s also cost-effective since each partner focuses on their area of expertise.

Public Limited Company

A public limited company can offer shares to the public and list on the stock exchange. Shareholders have limited liability. Must meet stricter regulatory requirements, including minimum share capital and public disclosure.

Sole Proprietorship

Sole Proprietorship is Owned and operated by a single individual. The owner is personally liable for all business debts and obligations. Simple to set up with minimal regulatory requirements. No separate legal entity from the owner.

Brach Office

Foreign companies can set up branch offices in Jamaica by designating a local agent or a representative with the authority to manage all the branch’s activities. To complete the incorporation process, the branch needs a registered office in Jamaica. Law requires a minimum paid-up capital of $1, which will be used for the incorporation process.

Incentive Laws in Jamaica

Special Economic Zones: Developers and occupants in Special Economic Zones benefit from reduced income tax and exemptions from property tax, transfer tax, and customs duty. Certain industries, such as mining and financial services, are prohibited in Special Economic Zones.

Urban Renewal (Tax Relief) Act: Through this act, companies can obtain tax advantages to build in the regions where the state has been designated, that is, they can have tax free rent income and interest, stamp duty and transfer tax exemptions among other benefits. Tax credits can be used to get immediate benefits for upgrades and rental vows.

Junior Stock Market Companies: For the first five years companies that are included on the Junior Market do not pay tax, they are fully tax exempt and they get a 50% exemption for the next five years.

Employment Tax Credit: Offers non-refundable tax credits to employers which possibly results in reduction of their effective income tax rate. The credit is partially clawed back if dividends are distributed.

Large-Scale Projects/Pioneer Industries: The Income Tax Relief Act offers extra tax incentives for large-scale projects and pioneer industries, capped at 0.25% of GDP.

Productive Inputs Relief: Offers relief from customs and stamp duties on imports used in primary production, manufacturing, tourism, creative arts, and healthcare, provided local alternatives are insufficient.

Charitable Organizations: Registered charities can receive exemptions from income tax, customs duty, property tax, stamp duty, and transfer tax.

Jamaica Double Tax Treaties