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Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Jamaica 2013
PHASE 2: IMPLEMENTATION OF THE STANDARD IN PRACTICE
November 2013 (reflecting the legal and regulatory framework as at August 2013)
This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the OECD or of the governments of its member countries or those of the Global Forum on Transparency and Exchange of Information for Tax Purposes. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Please cite this publication as: OECD (2013), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Jamaica 2013: Phase 2: Implementation of the Standard in Practice, OECD Publishing. http://dx.doi.org/10.1787/9789264206151-en
Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews ISSN 2219-4681 (print) ISSN 2219-469X (online)
OECD 2013
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TABLE OF CONTENTS 3
Table of Contents
About the Global Forum . 5 Executive Summary . 7 Introduction11 Information and methodology used for the peer review of Jamaica11 Overview of Jamaica 13 Overview of the financial sector17 Overview of commercial laws and other relevant factors for exchange of information.18 Recent developments 19 Compliance with the Standards 21 A. Availability of Information 21 Overview 21 A.1. Ownership and identity information 23 A.2. Accounting records 47 A.3. Banking information 55 B. Access to Information . 61 Overview 61 B.1. Competent Authoritys ability to obtain and provide information . 62 B.2. Notification requirements and rights and safeguards. 86 C. Exchanging Information 89 Overview 89 C.1. Exchange-of-information mechanisms . 90 C.2. Exchange-of-information mechanisms with all relevant partners . 96 C.3. Confidentiality 97
4 TABLE OF CONTENTS C.4. Rights and safeguards of taxpayers and third parties. 100 C.5. Timeliness of responses to requests for information101 Summary of Determinations and Factors UnderlyingRecommendations.111 Annex 1: Jurisdictions Response totheReport .117 Annex 2: List of All Exchange-of-Information Mechanisms .119 Annex3: List of All Laws, Regulations and OtherMaterialReceived. 120 Annex 4: O verview of Commercial Laws and Other Relevant Factors for Exchange of Information 122 Annex 5: People Interviewed During On-site Visit 129
EXecutive SummarY 7
Executive Summary
1. This report describes and analyses the legal and regulatory framework for transparency and exchange of information for tax purposes in Jamaica together with the practical implementation of that framework. The international standard laid down in the terms of reference of the Global Forum for monitoring and reviewing progress towards transparency and exchange of information, considers the availability of relevant information within a given jurisdiction, the ability of the competent authority to access it swiftly, and whether the information may be exchanged effectively with its partners in information exchange. 2. Jamaica was a British colony and became an independent nation in 1962. Its legal system is based on English Common Law. Many of its laws were made during the British rule and continue to be in operation without significant changes. In October 2008, Jamaica announced that it will develop an International Financial Services Centre (IFSC). As a result, Jamaica was invited to become a Global Forum member. Jamaica joined the Global Forum in July 2010 and has actively co-operated in this review. The announced IFSC has not yet been established. 3. As regards the availability of information on the legal ownership of companies, Jamaica has laws that ensure that such information is to be held with the company and provided to the government authorities such as the Registrar of Companies. Further, the anti-money laundering legislation requires that information on the owners of companies be provided to banks or financial institutions, if these are their customers. However, a deficiency has been noted in the availability of information on the owners of share warrants to bearer, which grant a right to shares, without the need to record who holds the share warrant to bearer. The authorities advised that they have not come across any instances indicating the use of share warrants in Jamaica and peers have not indicated that this has been an issue in practice. Provisions under the relevant laws provide for investigative powers to the company itself and to the government authorities to inquire into the ownership of a company where the legal owners hold the interest on behalf of other persons (i.e.nominee arrangement). There is no provision requiring disclosure of ownership information by companies incorporated outside Jamaica but being tax resident in Jamaica due to presence of central management and control in Jamaica.
8 EXecutive SummarY
4. Jamaica does not have a specific law in place to impose any obligations on the partnerships and trusts to keep and retain ownership and identity information. However, ownership and identity information is required to be submitted to the registration and tax authorities. 5. Jamaican law ensures the maintenance of accounting records by companies. Partnerships, trusts and other taxable entities are compulsorily required to maintain accounting records for tax purposes. Although administrative laws require government authorities to hold the records submitted to them and the statute of limitations means all records are kept for more than 5years, there is not a specific requirement in the law for non-regulated entities to maintain that information for a five year period. This does not include financial institutions and other businesses and professions covered by the anti-money laundering laws and those laws require a compulsory five year retention period for records relating to customer due diligence and financial transactions. To address the deficiency identified, Jamaica amended its law after the review period on 28June 2013 (the amendments came into force on 15July 2013) to expressly provide for the requirement of all entities and arrangements to maintain accounting records and the underlying documents for a period of at least 7years. 6. During the period of review, Jamaica relied on two sources of law allowing its revenue authority to access information. One suffers from the fact that it cannot be used to obtain information from financial institutions and similar entities, and the other law which is used to obtain information from financial institutions is restricted by the requirement that the person in question is under examination by the Jamaican tax authorities. The latter is tantamount to a domestic tax interest and is an obstacle to the effective exchange of information. To address the deficiency identified, Jamaica amended its law after the review period on 28June and 28July, 2013 (the amendments came into force on 15July and 31August 2013, respectively) to remove the domestic tax interest requirement. 7. While Jamaica did not possess the compulsory access powers to obtain information directly from taxpayers and third parties during the period of review and had to rely on conducting tax audits to obtain information, it appears that this has not had a significant impact on effective EOI in practice as Jamaica managed to reply to most EOI requests within 90days during the period of review. Notwithstanding this, it is noted that the Jamaicas experience in collecting information for EOI purposes may be fairly limited due to the limited number of requests it has received during the period of review. In addition, the EOI Unit is fairly new and had only operated for less than four months during the period of review. Jamaica should put in place appropriate procedures to implement the access powers provided under the amended Revenue Administration Act and monitor its effectiveness.
EXecutive SummarY 9
8. Sanctioning powers are in place to secure the compliance of the provisions. Regular enforcement actions have been taken by the Companies Office of Jamaica, but the penalties provided under the relevant commercial laws and the magnitude of the sanctions are inadequate in providing an effective deterrence against non-compliance as many companies continue to be in default despite the application of sanctions. Active enforcement actions have not been taken regularly by the Tax Administration of Jamaica as the Tax Administration perceives the penalties provided under the relevant tax laws are too low to provide an effective deterrence against non-compliance. Jamaica is recommended to review the procedures in imposing penalties and the adequacy of the penalties provided under the relevant tax laws and commercial laws to ensure that they are effective in providing deterrence against non-compliance of the filing and reporting obligations. 9. Jamaica has EOI agreements with 26 jurisdictions, consisting of 11 bilateral tax treaties1, a CARICOM2 Multilateral Tax Treaty and 7 Tax Information Exchange Agreements. The CARICOM Multilateral Tax Treaty was signed by Jamaica and 103 other jurisdictions. However, Jamaicas EOI relationship with five of the CARICOM partners is not consistent with the standard. 10. During most of the review period (i.e.July 2009 to March 2012), Jamaica did not have a structured organisational procedures in place to handle EOI requests. However, this did not seem to have an impact on effective EOI in practice as Jamaica was able to respond to 25 out of 28 EOI requests within 90days. These 28requests were made by two EOI partners. An EOI Unit was established in March 2012 and appropriate monitoring mechanisms and operating procedures have been put in place to monitor and track all incoming EOI requests. These improvements should enable Jamaica to exchange information more effectively with its EOI partners. 11. Jamaica has been assigned a rating4 for each of the 10 essential elements as well as an overall rating. The ratings for the essential elements are based on the analysis in the text of the report, taking into account the Phase1 determinations and any recommendations made in respect of Jamaicas legal and regulatory framework and the effectiveness of its exchange of infor1. 2. 3. 4. Jamaica has signed both DTC and TIEA with Denmark and the USA. Caribbean Community. Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, St.Kitts and Nevis, Saint Lucia, St.Vincent and the Grenadines, and Trinidad and Tobago. This report reflects the legal and regulatory framework as at the date indicated on page 1 of this publication. Any material changes to the circumstances affecting the ratings may be included in Annex 1 to this report.
10 EXecutive SummarY
mation in practice. On this basis, Jamaica has been assigned the following ratings: Compliant for elements A.3, C.3 and C.4, Largely Compliant for elements A.2, B.1, B.2, C.1, C2 and C.5, and Partially Compliant for element A.1. In view of the ratings for each of the essential elements taken in their entirety, the overall rating for Jamaica is Largely Compliant. 12. A follow up report on the steps undertaken by Jamaica to answer the recommendations made in this report should be provided to the PRG within twelve months after the adoption of this report.
Introduction 11
Introduction
12 Introduction
the Financial Investigation Division, the Attorney Generals Chambers and the Jamaica International Financial Service Authority (see Annex5). 16. The following analysis reflects the 2010 Phase1 and the Phase2 assessments of the legal and regulatory framework of Jamaica in effect as at 19August 2013 and the practical implementation and effectiveness of this framework in the three-year review period from 1July 2009 to 30June 2012. 17. The Terms of Reference break down the standards of transparency and exchange of information into 10essential elements and 31enumerated aspects under three broad categories: (A)availability of information; (B)access to information; and (C)exchanging information. This review assesses Jamaicas legal and regulatory framework and the implementation and effectiveness of this framework against these elements and each of the enumerated aspects. In respect of each essential element a determination is made regarding Jamaicas legal and regulatory framework that either: (i)the element is in place, (ii)the element is in place but certain aspects of the legal implementation of the element need improvement, or (iii) the element is not in place. These determinations are accompanied by recommendations for improvement where relevant. In addition, to reflect the Phase2 component, recommendations are made concerning Jamaicas practical application of each of the essential elements and a rating of either: (i)compliant, (ii)largely compliant, (iii)partially compliant, or (iv)non-compliant is assigned to each element. An overall rating is also assigned to reflect Jamaicas overall level of compliance with the standards. 18. The 2010 Phase1 assessment was conducted by a team which consisted of two expert assessors and one representative of the Global Forum Secretariat: Ms. Maria Dolores Gil Esnal from the Federal Administration of Public Revenue, Argentina; Ms. Alexandra Storckmeijer from the Federal Tax Administration, Switzerland; and Mr. Sanjeev Sharma from the Global Forum Secretariat. The assessment team assessed the legal and regulatory framework for transparency and exchange of information and relevant exchange of information mechanisms in Jamaica. 19. The Phase2 assessment was conducted by a team which consisted of two expert assessors and two representatives of the Global Forum Secretariat: Ms. Cintia Mariel De Angelis from the Federal Administration of Public Revenue, Argentina; Ms. Alexandra Storckmeijer Sansonetti from the Federal Department of Finance, Switzerland and Mr. Robin Ng and Mr. Sanjeev Sharma from the Global Forum Secretariat. The assessment team examined the practical implementation of the legal and regulatory framework for transparency and exchange of information in Jamaica. 20. The ratings assigned in this report were adopted by the Global Forum in November 2013 as part of a comparative exercise designed to ensure the
Introduction 13
consistency of the results. An expert team of assessors was selected to propose ratings for a representative subset of 50 jurisdictions. Consequently, the assessment teams that carried out the Phase1 and Phase2 reviews were not involved in the assignment of ratings. These ratings have been compared with the ratings assigned to other jurisdictions for each of the essential elements to ensure a consistent and comprehensive approach.
Overview of Jamaica
21. The country of Jamaica consists of the single island situated towards the western end of the Caribbean Sea and the Pedro and Morant Cays (islets). The nearest neighbours are Cuba 145km to the north and Haiti, part of the island of Hispaniola, 100km to the east. Jamaica has a geographical area of 10991 square kilometres (4223 square miles) and a total coastline of 1022 kilometres (634 miles). The official language of Jamaica is English and it had a population of 27065007 as at 31December 2011. Jamaica is a member of the Commonwealth of Nations and it became an independent nation in 1962. It is divided into three counties and 14 parishes. Local governments are funded by local taxes and do not have regulation-making powers on issues beyond the scope of local administration. The capital city is Kingston (-5GMT). 22. The Jamaican economy is heavily dependent on services, mainly consisting of tourism and financial services, which account for more than 60% of GDP. The tourism industry earns over 50% of the countrys total foreign exchange earnings. The balance of its foreign exchange is mainly earned from export of Bauxite/Alumina, garments and agriculture products. Its major export trading partners are the United States of America (USA), Canada, United Kingdom (UK), Netherlands, France etc., whereas its imports are mainly from USA, Trinidad and Tobago, Germany and Venezuela. Jamaicas per capita Gross National Income was USD4301 in 2009 (United Nations). The currency of Jamaica is the Jamaican Dollar. (USD1 was equal to approximately JMD98 as at 31March 2013). Jamaica is member of the CARICOM8 single market and economy.
7. 8.
14 Introduction
General information on legal system and the taxation system Legal system
23. The Head of State is the British Monarch represented by the Governor General in Jamaica. Jamaica is a parliamentary democracy, modelled on the Westminster system. The Parliament comprises the monarch, the Senate and the House of Representatives. The Senate comprises 21 members appointed by the Governor General; 13 appointed in accordance with the advice of the Prime Minister and 8 in accordance with the advice of the Leader of the Opposition. The House of Representatives consists of 63 members elected under universal adult suffrage. The executive power of the government resides in the council of ministers (cabinet), which is led by the Prime Minister. The Prime Minister is the leader of the majority party or the leader of the majority coalition in the House of Representatives. Constitutionally, elections must be held every five years, but they may be called at any time by the Prime Minister. 24. The legal system of Jamaica is based on English common law. Justice is administered by the court system9 consisting of the Court of Appeal, Supreme Court, Resident Magistrates Court and Court of Petty Sessions. The Supreme Court has original jurisdiction and decides applications for redress of breaches of fundamental rights and freedom provisions of the Constitution. Within the Supreme Court, there are specialised courts such as the Revenue Court, established in 1971, and the Commercial Court, which began operations in February 2001. The hierarchy of laws in Jamaica is constituted by: (i)the Constitution of Jamaica; (ii)statutes and treaties; and (iii)common law and customs. 25. Taxpayers aggrieved by decisions of the tax administration can seek judicial review through civil proceedings in the Supreme Court. Both the taxpayer and the tax administration can contest a decision of the Supreme Court in the Court of Appeal and thereafter the Judicial Committee of the Privy Council. 26. For transposing the tax treaties into domestic law, the Minister of Finance makes a Cabinet Submission for Cabinet Approval. The approval is the ratification process. Thereafter, the treaty is incorporated into Jamaican laws where the Minister of Finance makes an Order pursuant to s.83 of the Income Tax Act 1955 (ITA). The Order (which includes the actual treaty) is published by way of a Notice in the Gazette which introduces the treaty into Jamaican Law.
Taxation System
27. All taxes on income are levied by the central government. Certain taxes on real property and licence fees are levied by central government but
9. www.moj.gov.jm/courts.
Introduction 15
administered by local government. Jamaica levies tax on income of every person and the basis of imposition of income tax is provided in s. 5 of the ITA. The person means any individual and also any body of persons, which include corporate. The body corporate subject to income tax means any body corporate, wherever resident, other than one whose entire income is, by s.12 of the ITA or any other enactment, exempted or relieved from income tax. 28. Every person liable to pay income tax is required to deliver a true and correct return of his whole income in the prescribed form (s. 67 of the ITA). Persons committing defaults in filing returns of income or making false claims are subject to penalties (including fines) and are liable to prosecution under the ITA. In Jamaica the tax year coincides with the calendar year, however the accounting year (i.e.fiscal year) starts on 1April and ends on 31March. 29. Income tax is charged on the worldwide income of resident individuals in Jamaica and the income of non-residents derived from Jamaica. There is no income tax on capital gains earned on the disposal of capital assets. However, there is a transfer tax of 5% of gross consideration or market value when title passes. Resident individuals which are considered non-domiciled in Jamaica, as approved by the Commissioner, or are Commonwealth citizens who are resident but not ordinarily resident in Jamaica are in principle taxable on foreign income only on a remittance basis (to the extent that such income is received in Jamaica (s. 27 of the ITA)). The test of residency in Jamaica is determined by whether the resident is ordinarily resident or domiciled in Jamaica. An individual is considered resident in Jamaica for a year of assessment, if the stay in the island is more than 183days in that year of assessment. The rate of tax for individual is fixed at 25%. 30. Jamaican resident companies are liable to income tax on all sources of non-exempt income wherever arising. A company is regarded as resident in Jamaica if its central management and control is located and exercised in Jamaica. A non-resident company is taxed on income of a branch carrying on a trade or business in Jamaica, i.e.the income arising in Jamaica. The rate of tax on companies ranges from 25% to 33.3% depending on size of the company and whether they are regulated by specified government agencies listed in Section30(1A) of the ITA. 31. Partnerships and joint ventures are not regarded as separate persons for income tax purposes and are fiscally transparent entities. Their members or participants are chargeable in their own right and in accordance with their residence status on their share of profits as if they had derived the profits directly. These entities are required to file tax returns.
16 Introduction
32. Trusts and estates are regarded as separate entities for tax purposes and any income accruing to the trust or estate is taxable. The trustees or personal representatives of the deceased are responsible for compliance.The profits and gains arising or accruing to a trustee from a trust estate or to a personal representative from the estate of a deceased person are subject to tax at the rate of 25%. Tax must be deducted at the rate of 25% from payments to beneficiaries out of the trusts estate, unless the Commissioner authorises the trustee(s) to make the payments gross after being satisfied that the beneficiary is not liable to file return under the provisions of the ITA (s.6(6) of the ITA). 33. Every person liable to pay income tax in respect of any year of assessment is required to deliver a true and correct return of his/her income from every source. (s.67 of the ITA). The term liable to tax is not defined in the ITA. The Government of Jamaica allots a unique nine-digit identification number known as a taxpayer registration number (TRN) to each individual taxpayer, business enterprise, organisation (non-profit, partnership, charity, etc.) by way of an automated system. For obtaining TRN, the taxpayers are required to submit various documents along with the application form. These documents contain useful information about the entity. TRN must be used when conducting business transactions with tax departments or government agencies. Penalties have been prescribed for non-registration. 34. The Tax Administration of Jamaica has indicated that the number of companies, partnerships, trusts and other entities registered for Taxpayer Registration Numbers (TRNs), available on TRN system as at 3September 2012 were:
Organisation type Companies Partnerships Non Profit Organisations Trusts Government Statutory Bodies Other Number of TRNs 42406 9720 1764 1174 2110 38 2737
35. Jamaica allows various tax incentives to qualifying foreign and local investors to facilitate industrial development, exploit and develop local resources, improve competitiveness of Jamaican international trade, promote economic growth and provide employment and economic development. 36. The Jamaican Export Free Zones (EFZ) is a government initiative to encourage foreign investment. Businesses operating within these zones have
Introduction 17
no tax on their profits, duty exemption on imports and exports, and relaxed customs procedures. However, they must export 85% of their produce outside of CARICOM. Created under the Jamaica Export Free Zones Act (EFZ) 1982, the zones are operated by the government. Benefits under the EFZ are granted only to companies incorporated or registered in Jamaica under the Companies Act (CA). In addition, all transactions must be conducted in US currency. Jamaica has five free trade zones but companies outside of the zones can apply for Free Zone status as Single Entity Free Zones. The first free zone, Kingston Free Zone (KFZ), was created in 1976. The other major free zones are Montego Bay Free Zone (MBFZ), Garmex Free Zone, Hayes Free Zone, and Cazoumar Free Zone. 37. The International Finance Companies (Income Tax Relief) Act 1971 as amended provides the establishment of international finance companies whose income from prescribed financial operations is subject to reduced income taxation at the rate of 2.5%. A company incorporated in Jamaica or outside Jamaica qualifies to be an international finance company (IFC), if at least 95% of the issued share capital and voting power is held by nonresidents. The dividends paid by an IFC to a non-resident are subject to withholding tax at a reduced rate of 2.5%. Payments to a non-resident of loan interest and royalties related to the prescribed financial operations may be made without the withholding of tax. Jamaica has stated that this law has been kept in abeyance and no approvals are being given to companies.
18 Introduction
Overview of commercial laws and other relevant factors for exchange of information
39. The Minister of Finance is empowered to enter into arrangements with foreign territories under the provisions of the Income Tax Act for the purpose of relief from double taxation of income or for the exchange of information for tax purposes. Jamaica entered into its first Income Tax Treaty with United Kingdom in 1973. At present, Jamaica has bilateral tax treaties with 12 countries10 and is also a party to the CARICOM Multilateral Tax Treaty, which is signed by 11 of the 15 CARICOM members11. Jamaica has also signed seven Tax Information Exchange Agreements. In addition, it has initialled an income tax treaty with the Netherlands Antilles (Curacao) in 2009 and Mexico in 2013, both of which have an EOI article providing exchange of information to the international standards. Jamaica is also engaged in negotiating tax treaties with a number of jurisdictions. 40. Section9(d) of the Revenue Administration Act refers to safeguarding the interest of Jamaica in the negotiation of international taxation agreements. The Minister of Finance is the competent authority for the DTC/TIEA purpose in Jamaica. The role of the competent authority has been delegated by the Minister to the then Director General of Tax Administration and now the current Chief Technical Advisor to the Commissioner General. The Chief Technical Advisor to the Commissioner General is currently acting as the interim Commissioner General of Tax Administration of Jamaica due to changes in the leadership of the Tax Administration. 41. Jamaica has enacted the Mutual Assistance (Criminal Matters) Act 1995 (MACMA). This is the primary domestic legislation that guides Jamaicas mutual legal assistance to foreign countries. The MACMA allows Jamaica to facilitate overseas law enforcement agencies by assisting in investigations and proceedings in relation to criminal matters. Such assistance is available only to the criminal law enforcement authorities of the requesting country. Under the act the country requesting assistance from Jamaica should either be (a) a designated Commonwealth country or (b) a treaty country.
10. 11.
Only 11 of these treaties have EOI provisions. The 15 members of CARICOM are: Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Suriname, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Trinidad and Tobago.
Introduction 19
Recent developments
42. The Government of Jamaica issued a press release on 1October 2008 regarding establishment of a Jamaican International Financial Service Centre (IFSC). The International Financial Services Authority Act (IFSAA) establishing the Jamaica International Financial Service Authority as the supervisory authority of the IFSC was passed by the Jamaican Parliament in February 2011. The IFSC has not been established as at 1May 2013. The Jamaica International Financial Service Authority advised that they are currently in consultation with various stakeholders in deliberating over the scope of services the IFSC may provide and is in the process of drafting the relevant laws and regulations to enable the establishment of the IFSC. The Authority also advised that no timeframe has been set in establishing the IFSC. 43. A Bill to establish Tax Administration Jamaica (TAJ) as a semiautonomous revenue authority was passed by the Jamaican Parliament in March 2013. The TAJ is responsible for taxpayer registration, taxpayer services, tax audits, investigations, assessments, collection, enforcement, legal representation and various support services. The TAJ is also responsible for the negotiation, administration and enforcement of international agreements relating to tax including EOI agreements. The Bill also provides for the establishment of a board responsible for overseeing the general administration of the authority and a Commissioner General responsible for the day-to-day operations of the TAJ. 44. To address the deficiencies identified during the Phase1 review, the Jamaican Parliament passed two Amendment Bills, amending the Revenue Administration Act on 28June and 28July, 2013. The amendments introduced express obligations in the Revenue Administration Act on all relevant entities to maintain reliable accounting records, underlying documentations for at least 7years. In addition, it also removed the impediments identified during the Phase1 review relating to the domestic tax interest requirement on the powers of the Competent Authority to obtain information from third parties and the prior notification of the taxpayer requirement. These two Amendment Bills came into force on 15July and 31August 2013, respectively.
A. Availability of Information
Overview
45. Effective exchange of information requires the availability of reliable information. In particular, it requires information on the identity of owners and other stakeholders as well as information on the transactions carried out by entities and other organisational structures. Such information may be kept for tax, regulatory, commercial or other reasons. If such information is not kept or the information is not maintained for a reasonable period of time, a jurisdictions competent authority may not be able to obtain and provide it when requested. This section of the report assesses the adequacy of Jamaicas legal and regulatory framework on availability of information. It also assesses the implementation and effectiveness of this framework in practice. 46. In respect of identity and ownership information of companies, several commercial and regulatory laws require the availability of such information. The information is to be held and maintained with the companies themselves and with the Registrar of Companies. However, the Companies Act (CA) provides for the issue of share warrants to bearer which have some of the characteristics of bearer shares. These share warrants to bearer can be transferred any number of times without such transfers being recorded in the register of members. The information about ownership of such share warrants is neither required to be kept by the companies nor available with any government authority. The authorities advised that they have not come across any instances indicating the use of share warrants in practice and peers have not indicated that this has been an issue in practice.
are not taken by the Tax Administration of Jamaica for the reasons that the low financial penalties provided in law that can be levied by the Court do not commensurate with the efforts involved in preparing the case for court hearing. It is thus recommended that Jamaica reviews the procedures in imposing penalties and the quantum of the penalties provided under the relevant tax laws and commercial laws to ensure that they are proportionate and provide for effective deterrence against non-compliance of the filing and reporting obligations.
Companies (ToRA.1.1) 12
53. In Jamaica, the Companies Act 2004 repealed and replaced the earlier Companies Act. Section2 of the Companies Act 2004 defines the term company to mean a company formed and registered under the Companies Act 2004 or an existing company. Section3 of the Companies Act 2004 provides the mode of formation of a company. One or more persons may form a company by signing and sending articles of incorporation to the Registrar and complying with the requirements of the act in respect of registration. Jamaica recognises the sole member company. Section4 of the Companies Act establishes a company as a legal person.
Types of Companies
54. Section3 of the Companies Act provides for the incorporation of the following type of companies: Company limited by shares A company having the liability of its members limited by the articles to the amount, if any, unpaid on the shares respectively held by them; Company limited by guarantee A company having the liability of its members limited by the articles to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up. A company limited by guarantee might be incorporated with or without share capital; Unlimited Company A company not having any limit on the liability of its members.
12.
Terms of Reference to Monitor and Review Progress towards Transparency and Exchange of Information.
56. Section25(6) of the Companies Act states that a public company is a company that is not a private company. 57. In addition, s.27A of the Companies Act defines Mutual Fund Company and provides special rules for it. A mutual fund company is a company having a share capital and incorporated for the purpose of investing the moneys of its members for their mutual benefit. The company states in its articles that it is a mutual fund company, having the power to redeem or purchase for cancellation its shares without reducing its authorised share capital and is registered under the Securities Act as a mutual fund. 58. An association formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object and intends to apply its profits, if any, other income in promoting its objects and to prohibit the payments of any dividend to its members can be allowed by the Minister to be registered as a company with limited liability and such company is exempted from sending the list of members to the Registrar. 59. In the case of a company limited by a guarantee and not having a share capital, no person other than a member can have a right to participate in the divisible profits of the company unless such provision was in existence from the beginning (s.20 of the CA).
Registration of companies
60. There are currently 1927 public companies, 58189 private companies and 1278 foreign companies registered with the Registrar of Companies in Jamaica as at 31December 2012. 61. Provisions relating to registration of companies are contained in s.11 to s.18 of the Companies Act. All companies incorporated in Jamaica (including, for example mutual fund companies) are required to register with
the Registrar of Companies. Section11 of the Companies Act requires that the articles shall be delivered to the Registrar who shall retain and register them if the articles comply with the provisions of the Act. Section13(2) of the Companies Act requires the production of a statutory compliance declaration by an attorney-at-law engaged in the formation of the company, or by a person named in the articles as a director or secretary of the company, or by a person who is a member of the Institute of Chartered Secretaries and Administrators engaged in the formation of the company certifying the compliance with the requirements under the Companies Act. The articles must be signed by each subscriber to the articles. 62. Section9 of the Companies Act requires that in the case of an unlimited company or a company limited by guarantee the articles must state the number of members with which the company proposes to be registered and, if the company has the share capital, the amount of share capital with which the company proposes to be registered. There is no provision to provide names and addresses of the members, while registering the company. An increase in the number of members beyond the registered number by an unlimited company or a company limited by guarantee requires to be notified to the Registrar of Companies and he shall record the increase.
to be filed along with the application; however, no information about owners is required to be filed. 72. Domestic and foreign companies are taxable entities in Jamaica and are required to file annual tax returns. A body corporate subject to income tax is defined in the ITA to mean any body corporate, wherever resident, other than one whose entire income is by s.12 of the ITA or any other enactment exempted or relieved from income tax. Tax returns are not required to contain any ownership information. 73. Jamaicas International Finance Companies (Income Tax Relief) Act 1971 (IFC Act), as amended provides for the establishment of international finance companies whose income from prescribed financial operations is subject to reduced income taxation. Section8 of the IFC Act provides that Minister may make regulations for prescribing the records to be kept and the returns to be furnished by branches in Jamaica of approved companies. Section9 of the IFC Act provide that other than the relief from liability to income tax under the principal act other provisions as are applicable to a company shall apply to an approved company. Jamaican authorities have submitted that the application of this act has been kept in abeyance and no approvals for benefits under IFC Act are being given. 74. In addition, tax incentives under various enactments like Export Industry Encouragement Act, Industrial Incentives Act, Motion Picture Industry Incentives Act, Hotel Incentives Act and Cottage Incentives Act are also being given in Jamaica. Jamaican authorities have clarified that the requirement for keeping ownership and accounting information with regard to companies obtaining benefits under these enactments and IFC are same as applicable to entities not receiving any benefits and tax audits are conducted by the Taxpayer Audit and Assessment Department, a division of the Tax Administration of Jamaica.
to ordinary shares in the company but cannot vote at shareholders meetings and only has his/her details included in the company share register when the warrant is surrendered. 80. Section103(1) of the Companies Act provides for registration of charges in a company, noting, inter alia, that the company must keep at its registered office a register of charges detailing all of the charges affecting the property of the company, giving in each case a short description of the property charged, the amount of the charge and, except in the case of securities to bearer, the names of the persons entitled thereto. 81. For those share warrants to bearer which are still in existence, the identity of owners of these warrants is not required to be provided nor maintained by the company in the register of members. The information regarding the ownership of this type of share warrant will also not be available in the annual return. As a result, Jamaica does not have mechanisms which allow the owners of share warrants to bearer to be identified.
Identity and ownership information of holders and owners of warrants to bearer in practice
82. The EOI Unit has confirmed that they have not received any EOI requests pertaining to identity information of holders/owners of warrants to bearer during the period of review. The authorities further advised that they have not came across any instances indicating the use of such share warrants during their normal course of tax audit and they do not have the statistics on the number of share warrants that may have been issued by public companies. The TAJ conducts approximately 5000 audits on private and public companies in a year during the period of review (2009/2010: 5451; 2010/2011: 4982; and 2011/2012: 4868) but they do not keep statistics breaking down the audits conducted for private and public companies. As the authorities have never come across any instances indicating the use of such share warrants, they did not have the experience in investigating the identity of the persons owning or holding warrants to bearer.
of the CA). The Minister may also require such information directly from the persons whom he has reasonable cause to believe to be interested in the shares or debentures of the company or that acts or has acted in relation to those shares or debentures as the attorney or agent of someone interested therein, without appointing inspectors (s.169 of the CA). 88. Jamaica has clarified that the law does not require disclosure of ultimate owners to any authority, where there is a chain of ownership in the company. Nonetheless, the beneficial ownership can be investigated where good reasons to do so exist. The Companies Act has given power to the Minister to appoint the inspector to investigate and report on the membership of any company and also for determining the true persons who are or have been financially interested in the success or failure of the company or able to control or materially influence the policy of the company (s.168 of the CA). The Minister is also empowered to investigate the ownership of any shares or debentures of a company by requiring the information from a person deemed to have interest in the shares or debentures. (s. 169 of the CA). In addition, financial institutions, subject to the Proceeds of Crime Act and the related Regulations of 2007 which provide for customer due diligence measures, are required to have the information regarding the identity of the individuals that ultimately control or own the corporate vehicle (see below).
Regulated entities
90. The Minister of Finance licenses merchant banks, commercial banks and building societies, and these services are supervised by the BOJ. The BOJ licenses and regulates remittance companies and bureaux de change. The Financial Services Commission (FSC) supervises and regulates the securities, insurance and private pensions industries. The applicants desirous of carrying out the regulated activities are required to provide the necessary information for registration in the desired field of activities. A company14 is required to submit the particulars of directors and the location of their registered offices, certificate of incorporation, list of shareholders and their shareholding, audited financial statements, tax compliance certificate and names and addresses of all persons beneficially owning 10% or more in aggregate of the outstanding
14. www.fscjamaica.org/content.php?action=content&id=83.
92. When a corporate customer is a part of a group of companies, the financial institution is required to ensure that it is fully aware of the ultimate beneficial owners/controllers of the company and that it is aware of any group arrangements or affiliates that could present a reputation risk to the financial institution (Para. 52 of the BOJ Guidance Note amended 2009).
Partnerships (ToRA.1.3)
94. The Partnership (Limited) Act 1853 is the statutory law relating to the formation and governance of the limited partnerships in Jamaica. In this type of partnership one or more partners, called general partners, have unlimited liability for partnership debts and other one or more partners have liability for those debts to the extent of the fund so subscribed by them or the capital they have subscribed. The general partners only have the authority to transact the business of the partnership and legal actions in respect of partnership business can be taken only against them. Limited partnerships are not allowed to carry on the business of banking or insurance. 95. A limited partnership can be established by two or more persons for carrying on the business subject to the limitations and conditions of the act. The persons desiring to form the limited partnership as general partners are required to make and severally sign a certificate which also contains the information about the names of all the general partners and special partners, their place of residence and the amount of capital which each special partner has contributed to the common stock. The certificate also mentions the period at which the partnership is to commence and the period at which it will terminate. The certificate is required to be filed with the Public Record Office. The partnership is considered to have been formed only after a certificate, probate and declaration is made, acknowledged, filed and recorded. 96. Modifications made to the limited partnership as regards the names of partners, nature of business or in the capital or shares etc. is deemed to be dissolution of the partnership and such partnership then takes the form of a general partnership. Similarly, if a limited partnership is continued beyond the time originally fixed for its duration without re-registration it is deemed to be taken to be a general partnership. The Public Record Office must be kept informed by the general and special partners of the partnerships continued existence. The terms of the partnership must be published in the government gazette. 97. Jamaica does not have any statutory provisions governing the general (ordinary) partnerships, wherein all the partners have unlimited liability for the partnership debts. Such partnerships are governed by the common law and the partnership agreement. This ordinary partnership does not have a legal personality of its own. 98. The Registration of Business Names Act requires every firm having a place of business in Jamaica and carrying on business to register with the Registrar of Companies. This Act defines the firm as an unincorporated body of two or more individuals, one or more of individuals and one or more corporations, or two or more corporations, who have entered in to partnership with one another with a view to carrying on business for profit, but
105. The identity of partners is required to be kept by the Public Record Office under the Partnership (Limited) Act in the case of limited partnership and for all the partnerships under the ITA by tax authorities in the form of return of income. The information of the partners is also available with the Registrar of Companies as per the requirements of the Registration of Business Names Act. The partners or any other persons including the service providers are not required by law to keep the ownership information. There is no provision under the law to disclose the ultimate owners of the companies who are partners in the partnership.
Foreign partnerships
106. As elaborated in the earlier paragraphs, foreign partnerships carrying on business in Jamaica must register their business names with the Registrar of Companies and provide and update information on each of their partners.
The COJ also advised that the data in the application form is also extracted manually and stored electronically in the COJs databases. 110. The COJ had brought lawsuits against 50 businesses (including sole proprietorships) during the review period whose names were not registered or whose registration had expired. The COJ also advised that these 50 lawsuits were subsequently discontinued due to administrative and procedural difficulties encountered. The COJ explained that under the existing provisions, three warning letters have to be served on the business and only after 1-year has lapsed on the third warning letter, the defaulting business may be subpoenaed to Court. However, due to the long timeframe, the COJ had not been able to locate the business after the required timeframe has lapsed. The COJ advised that they are currently studying the enforcement procedures and are considering making proposals to amend the Registration of Business Names Act to streamline the enforcement procedures and to remove the impediments in carrying out effective enforcement. 111. The COJ also confirms that the same enforcement procedures also apply to foreign partnerships operating in Jamaica. No separate statistics are available with regard to the number of enforcement actions taken against foreign partnerships for non-compliance with the requirements under the Registration of Business Names Act. 112. With regard to the tax filing obligations for partnerships under the Income Tax Act, the TAJ advised that enforcement actions enforcing the filing of the tax return have not been taken to date (see analysis in section A.1.6). 113. Based on the above observation, it is not clear whether information identifying partners of a limited partnership, which does not carry on a business in Jamaica or liable to tax in Jamaica (i.e.not subject to the Registration of Business Names Act and the ITA), is consistently available with the Public Record Office in practice. Jamaica should put in place proper mechanisms to ensure that information identifying partners of a limited partnership can be made fully available regardless of whether the limited partnership is carrying on a business in Jamaica or liable to tax in Jamaica. In addition, the enforcement action taken to enforce the requirements under the Registration of Business Names Act does not seem to be effective in ensuring information identifying partners of both ordinary and limited partnerships are available and Jamaica should review its internal procedures for carrying out the enforcement actions to ensure that the filing and reporting obligations are complied with to ensure the availability of identity information of all relevant entities and arrangements.
Trusts (ToRA.1.4)
115. Jamaica allows for the creation of trusts under its common law. However, it does not have specific laws which regulate the creation of trusts. The Trustee Act 1897 is in operation providing for the rights and responsibilities of the trustees. Powers and duties of trustees relate to appointment of new trustees, purchase and sale and various powers and liabilities of trustees are provided for in the Act. Powers of the court are also established with regard to the appointment of new trustees and vesting orders, relief for breach of trust and plea of statute of limitation. Section10(6) of the Trustee Act provides for recording of new trustee appointment in the record office, or in the office of the registrar of titles as to property registered under the registration of titles act of the Island. 116. The Trustees Act defines the trust as not including the duties incident to an estate conveyed by way of mortgage; but with this exception the expressions Trust and Trustees include implied and constructive trusts, and cases where the trustee has a beneficial interest in the trust property, and the duties incident to the office of personal representative of a deceased person. 117. Section3 of the Trustee Act, dealing with authorised investments indirectly refers to creation of trust by the instruments (if any), meaning that trusts in Jamaica may be non-statutory trusts, which are also referred as common law trusts. The trusts can be created by the instruments or orally. A common law trust relies on the rights of the trustees and such trusts possess the same rights, privileges and immunities as the trustees. 118. Section4 of the Records of Deeds, Wills and Letters Patent Act 1681 provides that the records of any deeds executed and proved or acknowledged and enrolled in the Record Office will constitute conclusive evidence of the transaction or arrangement the deed refers to. The same applies to last will and testament. 119. The Record Office Act 1879 deals with the law relating to public records. A deed after recording in the record office becomes the registered deed. The record office maintains records and enrolments of registered deeds and writing in the form of records and registers. Rule 5 of the Rule of Record Office requires the maintenance of an abstract book in the prescribed from, which includes information about the grantor (in the case of trusts the settlor) and grantee (trustee) of the deed. Section33 of the Record Office Act provides that all persons may search, exam and take abstracts of the public records. Jamaica has advised that the record office has been recording deeds
since 1660 and there are currently approximately three million recorded deeds which were filed for registration. 120. Jamaica has stated that, the persons required to comply with revenue law are mandated to register all deeds; whether it is a deed of conveyance or otherwise. Pursuant to s. 2-4 of the Stamp Duty Act and the attached Schedule and sections 2 and 6 of the Records, Wills and Patent Act, all deeds are required to be stamped and recorded at the Records Office. 121. Section4 of the Registration of Business Names Act provides for the registration with Registrar of Companies by a nominee or trustee and reads as follows: Where a firm, individual, or corporation having place of business in Jamaica carries on the business wholly or mainly as nominee or trustee of or for another person, or other persons, or another corporation, or acts as general agent for any foreign firm, the first mentioned firm, individual, or corporation shall be registered in manner provided by this Act,and,in addition to the other particulars to be furnished and registered, there shall be furnished and registered the particulars mentioned in the schedule. The schedule requires the additional particulars as the present Christian name and surname, any former name, nationality, and, if that nationality is not the nationality of origin, the nationality of origin, and usual residence or, as the case may be, the corporate name, of every person, or corporation on whose behalf the business is carried on: provided that if the business is carried on under any trust and any of the beneficiaries are a class of children or other persons, a description of the class shall be sufficient. 122. The above provisions indicate that in case of a trust, the full information on beneficiaries is not required to be given if the same are a class of children or other persons. 123. For registration under the business names act, the trusts are required to submit the trust deed which has information on the beneficiaries. A total of 1174 trusts and 1764 non-profit organisations have obtained tax registration numbers (TRN). The TRNs are used to register trust deeds for the purpose of tax administration. 124. The trust not being a statutory entity, the information on trusts is not in the public record except as discussed above, and the details of the trust and the identities of those involved known to the settlor and the trustees only. Jamaica was asked to clarify whether the information about all trusts created or administered in Jamaica would be available with Record Office. However, Jamaicas reply, is that the Record of Deeds, Wills and Patent Act requires that all deeds, patents, letters and wills should be recorded at the
Foundations (ToRA.1.5)
135. Jamaica does not have specific provisions for the creation of foundations. Certain companies limited by guarantee use the term foundation in their names but do not have the features of a foundation as understood under the laws of other jurisdictions. The regulations under the Companies Act apply equally to all these companies. As these companies are generally charitable organisations, they are treated as charities for tax purposes. 136. The EOI Unit within the TAJ has confirmed that they have not received any EOI requests concerning foundations during the period of review (i.e.1July 2009 to 30June 2012).
140. Section100 of ITA provides that any person guilty of an offence against ITA for which no specific penalty is provided shall be liable on summary conviction before a resident Magistrate to a fine not exceeding JMD10000 (approximately USD100) and in default of payment to imprisonment with or without hard labour for a term not exceeding 12months. 141. Section8 of the Registration of Business Names Act requires that any change in particulars need to be sent to the Registrar and any default shall be liable on summary conviction before a resident Magistrate to a fine up to JMD 200 (approximately USD2) for each day of the default and the default of in the payment of the fine may result into imprisonment with or without labour for a term up to 3months. 142. Non-compliance by a regulated entity with the POCA could result in the suspension or revocation of the licence. Additionally under the banking laws, breaches of the Standards of Best Practice (such as the BOJ AML/ CFT Guidance Notes) or any provision of the AML/CFT laws which imposes an obligation on a commercial bank, a merchant bank or a buildings society can lead to any one or more of the following sanctions, which do not include licence revocation or suspension: Requiring the licensee to give an undertaking signed by the majority of the members of the licensees Board to take such corrective action as may be agreed between the licensee and the Supervisor; The Supervisor issuing statutory directions to the licensee under this section; or The Supervisor issuing a cease and desist order to the licensee.
Total No. of Companies Registered with COJ (including foreign Year companies) 2010 2011 2012 79409 81306 83250
No. of companies that have not submitted annual returns 43575 46206 47014
147. Considering the number of companies that are registered with the COJ, it is noted that the number of companies not submitting their annual returns is very high and number of enforcement actions instituted against the delinquent companies by the COJ are very low. While the COJ has attributed the low filing compliance rate to the fact that many of the companies could have been dormant and not carrying on any business operations, it is recommended that Jamaica reviews the effectiveness and adequacy of its enforcement programme to improve the filing compliance rate. 148. Section337 of the Companies Act also empowers the COJ to strikeoff any company from the Register if there are reasons to believe that the company is not carrying on business or no longer in operation. When a company fails to submit its annual returns for a consecutive number of years, the COJ may trigger an investigation by contacting the directors of the company and/or conduct field visit to determine if the company is still carrying on a business or in operation. If it is established that the company is no longer in operation, the company will be struck-off from the COJs register through a notice published in the Government Gazette. In the last 3years, the COJ has struck-off 3258 companies from its register. 149. For foreign companies operating in Jamaica, the COJ advised that they do not enforce the provisions in the Companies Act which provide for the filing of annual returns and the filing of returns when any changes are made to charter, statutes or articles of the companies (s. 365(1) of the CA) due to resource
constraints. The non-compliance rate for submission of the annual return was very high at about 93% in the year 2012 (1194 out of 1278 registered foreign companies). However, it is noted that there are no obligations under the Companies Act for foreign companies operating in Jamaica to inform the COJ of any change of its shareholders or members in the annual returns and enforcement of this filing obligations will not ensure or impact the availability of identity and ownership information of foreign companies. The COJ explained that there are proposals to amend the Companies Act to include a provision for foreign companies to provide a list of shareholders upon initial registration and to notify the COJ of any changes as they occur to address the recommendation identified in the Phase1 peer review. The COJ also advised that the law to this change has been drafted and is in the process of obtaining Cabinets approval. However, no timeframe has been set for introducing the new obligation. 150. With regard to the obligations under the Income Tax Act and the Revenue Administration Act, TAJ advised that regular enforcement actions have not been taken to date. The TAJ explained that this is mainly because all sanctions can only be applied by the courts and the prescribed monetary penalties are too low to produce a deterrent effect. Further, the efforts and cost involved in preparing the case for Court hearing far exceeds the monetary penalties imposed on the defaulters. In TAJs view, the low monetary penalty does not create an effective deterrence against non-compliance in Jamaica. It is thus recommended that Jamaica reviews the adequacy of the penalties provided under the Income Tax Act and the Revenue Administration Act to ensure that they provide for effective deterrence against non-compliance of the filing and reporting obligations. It is also recommended that Jamaica reviews the procedures for applying the penalty and explore whether it is possible and more efficient for the monetary penalties to be applied directly by the regulating authorities than the Court.
Determination and factors underlying recommendations
Phase1 determination The element is in place, but certain aspects of the legal implementation of the element need improvement. Factors underlying recommendations Information is not required to be maintained by a company nor is it otherwise available to the competent authority that identifies the persons in an ownership chain where a legal owner in a public company acts on behalf of other person as a nominee or under similar arrangement. Recommendations Jamaica should establish a requirement that information is maintained indicating the person on whose behalf any legal owner holds his interest or shares in the public company or body corporate.
Phase2 rating
Phase2 rating Partially Compliant Factors underlying recommendations It is not clear whether information identifying partners of a limited partnership, which does not carry on a business in Jamaica or liable to tax in Jamaica, is consistently available with the Public Record Office in practice. Recommendations Jamaica should put in place proper mechanisms to ensure that information identifying partners of a limited partnership can be made fully available regardless of whether the limited partnership is carrying on a business in Jamaica or liable to tax in Jamaica. Jamaica should put in place proper and robust mechanisms to ensure that information identifying the settlor(s) and beneficiaries of a trust is fully available with either the relevant authorities or the trustee.
It is not clear whether the mechanisms that are in place to ensure that information identifying the settlor(s) and beneficiaries of a trust is available with the relevant authorities are effective in practice.
158. Private companies are subject to limited filing requirements with the Registrar of Companies (s. 124(3) of the CA). However, as mentioned previously if a body corporate holds shares in the private company then the exemption in this regard is not available. 159. The Partnership (Limited) Act and Trustees Act impose no record keeping requirements on partnerships or trusts. However, s. 89 of the ITA imposes a compulsory requirement on every person engaged in any trade, profession or business to keep proper books of account sufficient to record all transactions necessary to ascertain the gains and profits made or the loss incurred. The books of account should exhibit or explain his transactions and financial position. In absence of proper books of account, the Commissioner is empowered to assess the tax according to the best of his judgement. Failures to comply with the provisions also attract various penalties. As a result, taxpayers keep proper books of account and records. 160. Sections6 and 17 of The Trustees, Attorneys and Executors (Accounts and General) Act expressly provides that trustees are required to file accounts with the Office of the Registrar of the Supreme Court. According to the Jamaican authorities, 24 accounts have been submitted in the year 2010, 28 in 2011, and 22 in 2012 out of a total of 1174 trusts that have been issued with a Tax Registration Number. Having the tax registration number is prerequisite for the trust (or trustee) to interact with the Office of Registrar of the Supreme Court. In addition, there are also common law15 obligations for the trustee to keep an accurate account of the trust property and must always be ready to render it when required. 161. Similarly, entities operating in the Jamaica Export Free Zones have to be companies incorporated in Jamaica. Section46 of the Jamaica Export Free Zones Act provides for the sanctions as per s.99 of the ITA with regard to filing of false statements, false returns and for keeping false accounts. Therefore, though these companies are not liable to pay tax, these are required to maintain accounts. In addition, as these companies are liable to dividend tax imposed under the Income Tax Act, they continued to be subjected to the record keeping obligations meeting the international standard imposed under the amended RAA (passed by the Parliament on 28June 2013) as described and analysed in subsequent paragraphs. 162. Section99 of the Income Tax Act stipulates sanctions for making false statements or false declarations in the return of income, statements or declarations. Such a person is liable on conviction or indictment to a fine up to JMD 100000 (approximately USD1020) and a penalty of three times the additional tax that ought to be charged or to an imprisonment, with or without
15. Davis v Administrator-General (1965) 9 JLR 200; Halsburys Laws of England, 3rd Edition Volume 38; Kemp v Burn 1863 4 Giff. 348.
partnerships and trustees of a trust would be required to keep and maintain underlying documents such as the invoices and contracts which are relevant for determining its tax liability. Failure to comply with the new obligation under the RAA is an offence and the offender is liable on summary conviction in a Resident Magistrates Court to a fine not exceeding JMD 2million (approximately USD20500) and in default of payment thereof to imprisonment for a term not exceeding one year (s.17LA(2) of the RAA).
17.
Jamaica amended s.17LA(1) of the RAA again on 28July 2013. The amendment was approved by the Jamaican Parliament on 28July 2013 and came into force on 31August 2013. The amendment seeks to introduce examples of the type of underlying documents that the persons are required to keep and does not impact the retention period. The Amendment Bill came into force after the cut-off period (i.e.19August), The new amended s.17LA(1) of the RAA reads: Every person in lawful possession of any book, record or other document (including an underlying documents such as an invoice or contract) that is relevant to the tax liability of any person shall (a) keep every such document, in order to facilitate ascertainment by a Commissioner of the tax liability of any person; and (b) retain the document so kept for a period of not less than seven years..
The amendments to the Revenue Administration Act to address the lack of express obligations to maintain underlying documentations and to retain accounting records and documents for at least 7years were passed after the review period and onsite visit and the effectiveness of the new law could not be ascertained or verified.
177. Regulation7 of the POCA (MLP) Regulations2007 establishes minimum customer due diligence requirements and defines customer information as including the applicant for businesss full name, current address, tax payer registration number, date and place of birth (in the case of natural person) and, where applicable, the information referred to in regulation13(1) (c) (i.e.identity of the beneficial owner). 178. SectionIV of the BOJ AML/CFT Guidance Notes requires every bank/financial institution to obtain the information from all prospective customers about their identification. This information comprises the true name and names used, permanent address, including postal address, date of birth, nationality, sources of funds, contact numbers and tax payer registration number. The POCA (MLP) Regulations2007 also require the periodic updates of customer information at least once every five years. This requirement is also applicable to the existing client base of the financial institutions. 179. Regulation16 of the POCA (MLP) Regulations2007 specifically prohibits financial institutions from maintaining anonymous, fictitious or numbered accounts. Paragraph93 of the BOJ AML/CFT Guidance Notes also prohibits the maintaining of such accounts. 180. Regulations11 to 13 of the POCA (MLP) Regulations2007 requires procedures to be in place to ensure that the identities of both principals and agents are obtained, and that the authorisations of agents are obtained in the case of transactions being conducted by a person on behalf of another. 181. Regulation13C of the POCA (MLP) Regulations2007 stipulates that measures are satisfactory where in the case of any transaction involving settlements, trusts or other types of legal arrangements, the identity of the settlor, legal owner or other person who exercises effective control of the legal arrangement as the case may require, or the beneficial owner, is established. Supporting this, paragraphs73 and 74 of the BOJ (AML/CFT) Guidance Notes specifically require the due diligence measures in relation to legal arrangements include identification of all parties and beneficiaries concerned, the source of funds and the source of wealth and trust arrangements. 182. The BOJ AML/CFT Guidance Notes also requires financial institutions to ensure that the due diligence checks and reviews and investigations are available to the competent authority and designated authorities under the anti-money laundering laws. 183. POCA (MLP) Regulations2007 provides for maintenance and retention of the records of transactions between the banks and the customers by
185. The Caribbean Financial Action Task Force (CFATF) report of 200518 analysed Jamaicas compliance with the international AML/CFT standards. That report mentioned that, certain financial businesses are excluded from the application of AML/CFT regime; for example, money lenders, pawnshops and insurance brokers. The Jamaican authorities had indicated that while there was a move to bring the moneylenders and insurance brokers under the ambit of the AML/CFT regime; pawnshops are very limited in number and
18. www.cfatf-gafic.org/downloadables/mer/Jamaica_3rd_Round_MER_(Final)_ English.pdf.
did not constitute a major area of risk. It is observed that POCA provisions cover the insurance companies and insurance intermediaries. Also, money lenders and pawnshops do not hold accounts for their customers. 186. CFATFs follow up report19 (6March 2009) on Jamaica mentions that the POCA (MLP) Regulations2007 require keeping the identification and transactions records for a period of five years after the transaction. The report does not refer to any adverse findings in this regard. 187. Regulation14 of the POCA (MLP) Regulations2007 provides that records be kept for a period of five years commencing with the date on which the relevant financial Business was completed or the business relationship was terminated whichever occurs later. 188. Further, Regulation16 of the POCA (MLP) Regulations2007 mandates the retention of both identification records and transaction records by financial institutions for the prescribed period of 5years commencing from the date on which the relevant financial business was completed or the business relationship terminated whichever is later. 189. Supporting these regulations, the BOJ has issued the AML/CFT Guidance Note in 2004 (revised in 2007) and SectionIV.D of this note deals with record keeping requirements and its important features are: financial institutions should maintain records of client identification and transactions performed. This should include the minimum five year retention period from the termination of the business relationship; records relating to transactions carried out by each customer must be maintained for at least five years after the transaction has been completed.
190. The customer information has broad definition under POCA and the regulated financial institutions are required to maintain the customer information.
That oversight of the AML/CFT process is at an appropriately senior level to facilitate effective implementation and reports; That the oversight function is independent and reports directly to the Board/Board sub-committee as to the state of the institutions AML/ CFT risk.
194. Over the period 2010 to 2012, on-site examinations were executed by BOJ for the seven commercial banks, two merchant banks, four building societies and 40 credit unions. This included all credit unions with asset size exceeding JMD 1.05billion (approximately USD11.3million). Issues detected from the reviews include: cases with insufficient progress in completing retrospective due diligence for customers with whom relationships were formed prior to the coming into force of the AML/CFT regime; sub-optimal oversight by the Board of the institution of the AML/ CFT process; inadequate information documented to appropriately complete KYC/ CDD process in account opening; assessment of AML/CFT policies as being inadequate in some cases; assessment that the systems put in place for account monitoring could have been more effective.
195. As a product of the examination process, each institution examined receives a report from BOJ that outlines all breaches and deficiencies detected at the on-site examination and sets out a required timeline (generally 14days) for appropriate remedy action to be taken for each of such infraction/issue. If the infraction/issue remains outstanding for a protracted period (i.e.beyond the time frame allowed by BOJ), the supervisory action is further escalated. The further actions that can be taken include requiring the Board of the institution to give an undertaking to remedy all infractions within a set time frame (generally 14days). After the set time frame, the supervisory action is further escalated to Statutory Directions issued pursuant to s.25 of the Banking Act, s. 25 of the Financial Institution Act or Regulation64 of the BOJ (Building Societies) Regulations. Other more severe sanctions for unsafe and unsound practices could follow and this include revocation of licensees. BOJ advised that they have an internal policy document titled Guide to Intervention of Supervised Financial Institutions by Bank of Jamaica which provides guidance on the imposition of sanctions and the appropriate supervisory response to the various infraction/issues. 196. The EOI Unit within the TAJ has confirmed that they have received 3 EOI requests pertaining to banking information during the period of review
B. Access to Information
Overview
197. A variety of information may be needed in a tax enquiry and jurisdictions should have the authority to obtain all such information. This includes information held by banks and other financial institutions as well as information concerning the ownership of companies or the identity of interest holders in other persons or entities, such as partnerships and trusts, as well as accounting information in respect of all such entities. This section of the report examines whether Jamaicas legal and regulatory framework gives the authorities access powers that cover the right types of persons and information and whether rights and safeguards would be compatible with effective exchange of information. It also assesses the effectiveness of this framework in practice. 198. The ITA provides that the Minister may issue rules for the carrying out of provisions in agreements made with other States as appear necessary or expedient to the Minister in consequence of such arrangement. However, Jamaica has not enacted any specific rules or regulations for the carrying out the provisions with respect to the exchange of information contained in agreements with treaty States. The legal basis for providing the necessary access and powers to the competent authorities is that which is available under its domestic laws. The report identifies potentially significant deficiencies in the Jamaican authorities powers to obtain information for the exchange of information purposes. The most significant of these deficiencies is that the tax authorities can only obtain information where the taxpayer is under examination in Jamaica. That is, an audit must be commenced in order to gather information to respond to an international request for information. For example, if a treaty partner wishes to obtain information about a bank account of its taxpayer in Jamaica, the Jamaican competent authority would be able to obtain information from bank only if two conditions are met namely; the person should be a taxpayer in Jamaica and tax proceedings should be in progress. In absence of a pending tax examination, the domestic laws do not grant competent authorities the power to obtain information. In practice, the tax authorities generally initiate a tax audit to obtain information for exchange of information purposes.
201. Section83 of the ITA provides the power to the Minister to make orders declaring arrangements entered into by Jamaica with other territories for the purpose of relieving double taxation or exchanging information for tax purposes to have effect in Jamaica notwithstanding anything contained in any other enactments. The Minister of Finance is the competent authority for DTC and TIEA entered into by Jamaica. The role of the competent authority was delegated by the Minister of Finance to the Director General of Tax Administration. Arising from a Bill of Parliament to establish the TAJ as a semi-autonomous revenue authority, the post of Commissioner General responsible for the day-to-day operations of the TAJ was established to replace the Director General of Tax Administration. The competent authority does not have any power to obtain the information directly from the taxpayer or a third person. The competent authority, when requested by the foreign counterpart, obtains the information through the field authorities, which have powers under the Income Tax Act 1955 and the Revenue Administration Act 1985. 202. Section17F of the Revenue Administration Act (RAA) provides for disclosure of information among authorities within the various departments of revenue. The obligations as to secrecy or other restrictions upon the disclosure of information imposed by any law will not prevent such disclosure of information. The information obtained can also be disclosed for the purpose of any proceedings connected with a matter in relation to which the Commissioner or the other officer performs his duties. These specific
provisions and other provisions specified in s.83 of the ITA allow the competent authority to seek required information from the Commissioners. 203. The tax authorities have powers under the Revenue Administration Act and the Income Tax Act to obtain information. The RAA provides powers relating to obtaining information from third parties, inspection, verification and search and seizure. The powers under the RAA may only be exercised when the person about whom information is sought is under examination by the tax authorities in Jamaica. The provision is used where the information is being sought from specified bodies such as banks, building societies or other financial institutions and the Commissioner must proceed by court order. 204. Section70(1) of the ITA provides as follows: Every person, whether he is or is not liable to pay income tax, upon whom the Commissioner of Inland Revenue may cause a notice to be served requiring him to make and deliver a return of his income or the income of any person, shall, within fifteen days after the date of the service of such notice, make and deliver to the Commissioner of Inland Revenue a return as aforesaid. 205. The Commissioner may therefore use this provision, in cases falling outside the scope of the RAA, to seek information about the income of any person. That person does not have to be under examination by the tax authorities. 206. The Jamaican authorities acknowledge that there is some conflict between both provisions and that there is a need to rationalise the provisions so as to provide for the widest possible information gathering powers. A Bill to amend the Revenue Administration Act to explicitly empower tax authorities to gather information for the purposes of exchange of information was passed by the Jamaican Parliament on 28June 2013 (the Amendment Bills came into force on 15July 2013).
for obtaining information required for the issue of notice under s.66(3) a notice issued for failure to declare estimated income tax; and for making assessment under s.72(3) of the ITA.
214. Related to this is s.91(2) of the ITA, which empowers the Commissioner to authorise any person for the purpose of verifying the correctness of any return, statement, declaration or particulars delivered under the ITA to enter upon any premises of the taxpayer between hours of nine in the morning and nine at night and inspect and make copies of any books, documents, or other material relating to return, statement, declaration. 215. In accordance with the ITA, the competent authorities may only exercise their enquiry, investigation, verification and inspection powers in the conduct of an assessment, examination or when dealing with an objection to a tax assessment.
any documents or records; and the payment of any tax which that taxpayer is liable to pay under that law; and any notice served on that taxpayer by the Commissioner or any requirement made by the Commissioner in relation to the furnishing of information, the production of documents or records or the payment of tax. 221. During the Phase1 review, it was determined that the access powers under the ITA is restricted to the conduct of an assessment, examination or when dealing with an objection to a tax assessment in Jamaica while the access powers under s.17G of the RAA is restricted to domestic tax purposes. It was concluded that Jamaica did not have the necessary access powers to enable it to engage in effective exchange of information. 222. In response to the determination and recommendation made during the Phase1 review, Jamaica has conducted a thorough analysis of the powers available to its competent authority in accessing and obtaining information for EOI purposes. The option chosen by Jamaica to implement the recommendation was to amend the RAA. The reason for amending the RAA rather than the ITA is because the RAA is an omnipotent revenue law with wider coverage than the ITA. The Amendment Bill amending the RAA was passed by the Jamaican Parliament on 28June 2013 and came into effect on 15July 2013. It includes amendments to the existing s.17G of the RAA and the insertion of a new s.17IA to the RAA. The amended s.17G of the RAA and the new s.17IA of the RAA read: 17G.-(1) Where a Commissioner has reasonable grounds for suspecting that a person mentioned in subsection(3) has possession or control of any information, document or record which is relevant to the duties of the Commissioner in relation to (a) making an assessment in relation to a taxpayer under any relevant law; (b) making an investigation into any case involving tax evasion or for the prevention of fraud on the revenue; (c) determining the tax liability of a taxpayer under a relevant law; (d) collecting any outstanding amount owed by a taxpayer on account of tax, penalty, interest or fine under any relevant law; or (e) an international tax agreement the Commissioner may apply to a Judge in Chambers in accordance with subsection(2) for an order under subsection(4) in relation to the person suspected of having possession or control of the information, document or record.
(6) An order under subsection(4) shall specify the time when and the place where the information, document or record shall be produced or made available, as the case may require. (7) Any obligation to maintain secrecy or any restriction on the disclosure of information or the production of any document or record imposed on any person by or under any of the Acts referred to in subsection(3) shall not apply to the disclosure of information or the production of any document or record pursuant to a requirement under this section. (7A) Notwithstanding any duty of confidentiality or secrecy under any relevant law or any law of a treaty partner to the contrary, the provisions of this section shall prevail in relation to the disclosure of information or the production of any document or record pursuant to a requirement under this section. (8) A person who(a) refuses to comply with an order made in relation to that person under this section; or (b) knowingly provides false or misleading information in purported compliance with such order, is guilty of an offence and liable on summary conviction in a Resident Magistrates Court to a fine not exceeding two million dollars. 17IA(1) Every person, whether that person is or is not liable to pay any particular tax or is the subject of an audit or other tax related action, upon whom the Commissioner General may cause a notice to be served requiring that person to supply in writing any information and, as the case may require, produce for inspection any documents specified in subsection(2), shall, within thirty days after the date of the service of the notice, produce the information or documents requested. (2) the information and documents referred to in subsection(1) (a) may relate to the person on whom the notice is served or any other person and may be in respect of the administration or enforcement of any relevant law; (b) may relate to a person (whether identified or not) who may be of interest to the Commissioner General in connection with the administration or enforcement of any relevant law; and (c) shall be in such form and may be supplied in such manner as the Commissioner General may direct or prescribe.
for a production order while the new s.17IA of the RAA provides for direct access to information through a written notice issued to the holder of information (other than those persons cover by s. 17G(3) of the RAA) by the Commissioner General. 224. For the amendments to s. 17G of the RAA, the definition of the term international tax agreement was also added into s.2 of the RAA as the term was referred to in the new s.17G(1) of the RAA. Under s.2 of the amended RAA, the term is defined to mean a Treaty, Convention or other international agreement that is in force and to which Jamaica is a party, the purpose of which is to provide for the exchange of information for tax purposes and to afford relief from double taxation.22 225. Section17G(1) of the RAA was amended to include a new subsection (e) which provides that the Commissioner General may apply to the Court for a production order for purposes of fulfilling his obligations under an international tax agreement. 226. The Amendment also sought to remove another impediment identified during the Phase1 review where the Commissioner General of TAJ must first obtain the required information directly from the taxpayer before applying to the Court for a production order to compel a third party information holder to provide the information. This is done by providing 2 new exceptions in s.17G(4A) of the RAA. The new s.17G(4A) reads 17G(4A) For the purposes of an application under subsection(1), the Commissioner is not required to make any prior request of the taxpayer in any of the following circumstances (a) where any revenue department is satisfied that documents or other evidence will be destroyed or concealed or treated in a manner which would inhibit the work of that or any other revenue department; or
22. Jamaica amended the definition of international tax agreement again on 28July 2013 (which entered into force on 31August 2013) to remove a potential ambiguity relating to whether the definition of international tax agreements covers a Tax Information Exchange Agreement (TIEA). The ambiguity arose because of a transposition error when the text of the RAA was included in the Amendment Bill. The new revised definition of international tax agreement reads: international tax agreement means a treaty, convention or other international agreement that is in force and to which Jamaica is a party, the purpose of which is to provide for the exchange of information for tax purposes or to afford relief from double taxation..
Act can be obtained from them by following the procedure available under the old s.17G of the RAA. 232. The Commissioner General can obtain the information held by banks and financial institutions by requesting a production order from the Revenue Count under s.17G of the RAA. However, the Revenue Court will only issue the production order in the following circumstances during the period of review (i.e.before the amendment made to the RAA came into effect): the Commissioner should have reasonable grounds for suspecting that the information is in the possession or control of the person such as a bank or financial institution; the information should be relevant to the duties of the Commissioner with regard to making an assessment in relation to a taxpayer under any relevant law, making an investigation into any case involving tax evasion or for the prevention of fraud on the revenue, determining the tax liability of a taxpayer under a relevant law; or collecting any outstanding amount owed by a taxpayer on account of tax, penalty, interest or fine under any relevant law; the court can issue production order only in the case of a taxpayer and the taxpayer in the RAA is defined as includes any person whose liability to make payment of revenue to a revenue department is in question whether or not, in the event, the payment is waived or remitted or no amount is found payable; the Court is required to be convinced that a fishing expedition is not being pursued and the taxpayer is not co-operating in providing the information; the information is first requested from the taxpayer.
233. With the amendment of the RAA on 28June 2013, the Commissioner would be able to obtain information held by banks and financial institutions by requesting a production order from the Revenue Court under the amended s.17G of the RAA. There is no longer the requirement for the information to be needed for the assessment of a taxpayer in Jamaica and the Commissioner may request the information so long as the information is relevant to his/ her duties in relation to an international tax agreement. In addition, the requirement to obtain the information directly from the taxpayer first has also been removed in relation to answering an EOI requests received by Jamaica. 234. The protocol to the Jamaican tax treaty with Spain provides that the Minister has the power to obtain bank information. Jamaica has clarified that the requirements of approaching the court before obtaining the information from the banks also applies to the Minister.
from the partnership or trusts, if no tax proceedings are pending in respect of person for which information is requested. The information about new trustees can be obtained by the Commissioner from Record Office, referred to in s.10(6) of the Trustees Act, by using powers contained in s.70(5) of the ITA. 241. Jamaica has replied that non-charitable trusts are required to file income tax returns, therefore the information about the settlors, trustee and beneficiaries are available in the tax returns of such trusts. The assessment team verified the information available in the tax form23 and such form does not require providing the information about the settlors of the trust, though the information on beneficiaries is available. The charitable trusts file their annual financial statements to the Taxpayer Audit and Assessments Departments. Jamaica has not furnished the copy of annual financial statements or other documents with regard to charitable trusts, who are exempt from paying taxes as well as from filing tax returns, therefore the availability of information in such could not be verified by the assessment team. 242. Tax authorities dealing with the registration of taxpayers (s. 17D of the RAA) have information about the taxpayers as is required to be provided by them and this information can be used to meet the request received. 243. The non-resident beneficiaries of a trust or the non-resident partners of a partnership created in Jamaica are assessed to tax through the representatives of these persons in Jamaica, as per s.53 of the ITA. In the case of a beneficiary of a trust, the representative is the trustee (s.55 of the ITA).
23.
www.jrs.gov.jm/home_template.php?page=forms&ye=1&desc=Income+Tax.
possession or control, to produce the information and give evidence in connection with any proceedings to comply with its obligations under EOI arrangement. This power to issue the notice should not be limited by the fact that such person should be under tax examination. This power may be subject to internal controls and safeguards to avoid the misuse. 252. To address the deficiency identified above, a Bill amending the RAA was passed by the Jamaican Parliament on 28June 2013 (the Amendment Bills came into force on 15July 2013). The new s.17IA of the RAA provides the Commissioner General with direct access powers to request information from any person in Jamaica (with exception to persons specified in s.17G(3)). Section17G(1)(e) of the RAA expressly provide that the Commissioner General of TAJ may apply to the Court for a production order to obtain and access information held by certain specified persons in s.17G(3) of the RAA (i.e.banks, financial institutions and public accountants etc.) for EOI purposes. The failure to provide information under these two sections is an offence and the offender may be subjected to fines and/or imprisonment if convicted by a Court (ss. 17G(8) and 17IA(4) and (5) of the RAA).
INCRS (Integrated Cash Remittance System) Contains information on payments made at all Tax Offices in respect of all tax types and certain other government related revenues. AMVS (Automated Motor Vehicle System) Contains detailed information on motor vehicle ownership, registration and payment.
258. The information may also reside in the databases or systems maintained by other government authorities/agencies. The TAJ does not have direct access to the data or information maintained by other government
authorities/agencies. Procedures to obtain information vary depending on the authorities as mentioned below: Companies Office of Jamaica The TAJ has entered into a Memorandum of Understanding with COJ for providing information on companies and businesses. Both these authorities are working out the terms of their cooperation. Land Valuation Department Information on the registration and valuation of property can be requested by sending a written request to the Department by TAJ. Ministry of Labour and Security Information on expatriates working in Jamaica is maintained by this authority and information including the period of stay and work permits issued can be requested by sending a written request to the head of department by TAJ. Passport Immigration and Citizenship Agency Information on the arrival and departures of persons, immigration and citizenship status of non-residents and non-Jamaicans, issuance of passports and travel documents can be requested by sending a written request to the agency by TAJ.
259. In situations where the requested information is in possession of the taxpayer or a third party, the EOI Unit may write to that person to request for the information. However, the EOI Unit did not have the compulsory powers to compel the person to provide the information if the person refused to provide the requested information during the review period. The TAJ had requested information under this approach and had been successful in obtaining the information from the taxpayer/third party. The TAJ has not encountered any case where the taxpayer/third party refused to provide the information when requested by the TAJ. In cases where the taxpayer/third party refused to provide the information, the General Manager of the EOI Unit resorted to one of the following procedures depending on the complexity and specificity of each case: Tax Audits In cases where information had to be obtained directly from the taxpayer/third party (e.g.invoices, contract documents, vouchers or an explanation is required from the taxpayers), a request was made to the General Manager of the Regional Service Centre or the Large Taxpayer Unit to conduct a tax audit on the taxpayer/third party. Jamaica advised that they had conducted tax audit in one case (out of 28 EOI requests) to obtain the information required. Investigation and Intelligence This usually involved complex cases and is usually suitable for cases where there is evidence that the taxpayer had contravened tax laws or the case would eventually
with the EOI Unit and the peer who requested the information, it was established that the EOI request was received in February 2010 and responded to in March 2012 by Jamaica. As the request pertains to periods before the establishment of the EOI Unit, the EOI Unit does not know the precise reason for the delay. The EOI Unit reckoned that the need to conduct a tax audit, no proper mechanism to track and monitor the request and the lack of dedicated resources to handle EOI requests probably contributed to the long response time. It is also noted that the EOI request was not a request for banking information related to a particular account at a specified bank but a request asking if there was information indicating that the entity under investigation by Jamaicas EOI partner had a bank account in Jamaica. The TAJ conducted a tax audit on the entity and concluded that no relevant information was available to indicate that the entity had any bank accounts in Jamaica. For the other 2requests, the EOI Unit requested the banking information from the accountholder and the accountholder provided the information voluntarily to the EOI Unit and the information was provided to the requesting jurisdiction. For the other 4requests pertaining to identity and ownership and accounting information, the information were obtained from TAJs databases, other government entities databases or through tax audit and were provided to Jamaicas EOI partners. 263. While Jamaica did not possess the compulsory access powers to obtain information directly from taxpayers and third parties during the period of review and had to rely on conducing tax audits to obtain information, it appears that this did not have a significant impact on effective EOI in practice. This is because Jamaica managed to reply to 25 of the 28 EOI requests within 90days during the period of review (the other three cases were answered within 1 and 2years). Notwithstanding this, it is noted that the Jamaicas experience in collecting information for EOI purposes may be fairly limited due to the limited number of requests it received during the period of review. A large majority of these EOI requests were also requests for general information where the information requested may already be available in TAJs tax files or databases and there was no need for Jamaica to exercise its compulsory powers. While Jamaica has addressed the deficiencies relating to its access powers identified during the Phase1, the effectiveness of the new law cannot be ascertained or verified as it was passed by the Parliament after the review period and after the onsite visit was conducted. In view of these observations, Jamaica should put in place appropriate procedures to implement the new access powers and monitor its effectiveness.
266. Similar provisions regarding secrecy, exceptions thereof and contravention amounting to an offence are available in s.44 of the Financial Institutions Act. 267. Secrecy provisions are also contained in s.34D and s.47 of the Bank of Jamaica Act. Section34D(1)(b) requires that an authorised officer shall not disclose other than for the purpose of the Bank of Jamaica Act, the Banking Act, or the Financial Institutions Act, any information regarding the affairs of a customer of a commercial bank or specified financial institution, obtained in consequence of the performance of his duties under the Act. Provisions of s. 47 require the officers and servants and auditors of the bank to preserve and aid in preserving secrecy. Unauthorised disclosure constitutes an offence.
268. There is no restriction in the company law for providing the information to the tax authorities. But, s.390 of the Companies Act provides that a person who has acted as attorney for the defendant cannot be required to disclose any privileged communication to him in the capacity of attorney. 269. Section4 of the ITA requires every person involved in the administration of the act to deal with all documents, information, returns, assessment lists and copies of such lists relating to the income or items of income of any person as secret and confidential. However, communicating the information or contents of documents for the purpose of the act and to the person authorised by the Minister is permitted. Similar secrecy provisions are available in s.17H of the RAA, s.19A of the Customs Act, s.37 of the Transfer Tax Act, s.8 of the Asset Tax Act and s.59B of the Securities Act. 270. Section17 of the new TAJ Act also contains obligations for tax officials to maintain secrecy on information they have access in the course of their duty. For instance, all the documents, information and records relating to the income or affairs of any person must be dealt with as secret and confidential by every person having an official duty or employed in the TAJ. He must also not communicate the information or anything contained in the documents or records which are in his possession or control to any person except to the Commissioner General or an officer of a revenue department or any other person to whom he is authorised by the Minister to communicate pursuant to any other law. He can also communicate the information for the purposes of the TAJ. As the administration and enforcement of the international agreements relating to tax is the function of the TAJ, therefore, there are no restrictions on providing information to the EOI partners. 271. Section17H of the RAA, s.62 of the General Consumption Tax Act and s. 59B of the Securities Act has additional provisions of secrecy applicable to the persons to whom the information is communicated. They shall regard and deal with such information as secret and confidential and shall make and subscribe a declaration to that effect before a Justice of the Peace. 272. The secrecy provisions available under various acts can be overridden under various circumstances, as in the case of the Banking Act and Financial Institutions Act discussed above. The information can be obtained by the Commissioner General by obtaining production order. The tax authorities share information for the purposes of the act. Due to these specific safeguards inbuilt in the law, the information can be made available to the tax authorities and a secrecy provision as such does not act as a barrier to information exchange. 273. Contravention of the secrecy provisions amounts to an offence under the respective enactments and also under the ITA. Section83 of the ITA authorises the Minister to make orders declaring arrangements to be in force
275. The secrecy provisions under various enactments are in place but information may be exchanged between different administrative authorities, if authorised by the Minister. In practice, the Minister has never granted such permission to exchange information between different administrative authorities. 276. With regard to legal professional privilege applicable in Jamaica, the communications that may attract legal professional privilege are those that are passed between the attorney-at-law and his or her client in professional confidence and in the legitimate course of the professional employment of the attorney-at-law24. It is noted that the privilege belongs to the client and not to attorney-at-law and the attorney-at-law cannot reveal the communications between him/her and the client, unless the client expressly waives his or her right to the privilege. This is a broad principle which is subject to a number of exceptions. The exceptions are elaborated below: Legal professional privilege cannot be used to mask or permit criminal conduct and the privilege cannot be used by an attorney-at-law to refuse disclosure if that attorney-at-law is aware that a crime has been committed.
24. See the guiding principles derived from the following case law: Jamaican Bar Association v The Attorney General and the Director of Public Prosecutions; Ernest Smith & company et al. v The Attorney General and the Director of Public Prosecutions and Deputy Superintendent of Police Karl Plummer; Hugh Thompson et al. v The Attorney General and the Director of Public Prosecutions SCAA Nos.96, 102 & 108/2003.
Legal professional privilege can be broken down into two types, namely litigation privilege and legal advice privilege25. - Litigation privilege only applies when the legal proceeding are adversarial. It is not applicable when the proceedings are primarily non-adversarial and/or investigative. Legal advice privilege is applicable where communications between the attorney-at-law and the client relate to the giving and receiving of advice in the relevant legal context. It can cover a situation where litigation is not pending or contemplated, or where litigation is not adversarial. The relevant legal context would not cover a situation where the attorney-at-law is acting in a capacity (e.g.as director of company) other than as an attorney-at-law.
Jamaica should put in place appropriate procedures to implement the new access powers provided under the amended Revenue Administration Act and monitor its effectiveness.
25. Walter Lilly and Company Ltd v Mackay [2012] EWHC 649 (TC) and Three Rivers District Council and others v Governor of the Bank of England (No.5) [2005] 4 ALL ER 948.
277. The domestic law does not require that the person who is the subject of the request be notified that such a request has been made. However, s.17G of the old RAA provides that the Judge in Chambers may issue production orders for obtaining information from third parties after being satisfied that the Tax Commissioner has requested the information from the taxpayer without success. Therefore, the taxpayer is notified under the RAA. 278. A Bill amending the RAA to remove the requirement, where there is a request for information arising from an international tax agreement, for the Commissioner General of TAJ to first request the information directly from the taxpayer before applying to the Court for the production order to compel a third party information holder to provide the information was passed by the Jamaican Parliament on 28June 2013 (see analysis in section B.1). In this regard, Jamaica has adequately dealt with the recommendation made during the Phase1 review. 279. The limits on information exchange due to rights and safeguards are provided in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary and in Article26 of the OECD Model Tax Convention on Income and on Capital and its commentary. The assessment team could find out the provisions for these rights and safeguards of taxpayers and third parties in the domestic laws of Jamaica as mentioned below: s.45(1) of the Banking Act allows the authorisation by the Minister to share information with the foreign countries if he is satisfied that such sharing of information is in public interest; and under the judicial procedure mentioned in s.17G of the RAA persons registered under the Public Accountancy Act are required to furnish information, documents or records which form part of taxpayer accounting records only. This indirectly indicates non-disclosure of the privileged communication between the accountant and the taxpayer.
280. The Income Tax Act and the Revenue Administration Act do not provide the safeguards to the taxpayer or third parties with regard to the following, as the acts do not mention that the Minister will decline exchange of information where the information is: a trade, business industrial, commercial or professional secret; Information the disclosure of which would be contrary to public policy (ordre public).
281. It is necessary that the laws of Jamaica provide the safeguards to taxpayers which are guaranteed by the standards of exchange of information and the competent authority should be in a position to decline information for the safeguards provided in the EOI mechanisms of Jamaica. Regarding safeguards, Jamaica has clarified that, in seeking re-dress, the taxpayer may go through the Civil Proceedings in the Supreme Court where they would apply for Judicial Review. Pursuant to Part56.6 of the Civil Procedure Rules, persons who are seeking Judicial Review must do so promptly and in any event within 3months from the date when the grounds for the application first arose. This is done in the form of an ex-parte application for leave which is usually granted. Upon the hearing of the matter, the court can offer several remedies including quashing the decision of the Tax Authorities. Either party may then appeal to a higher court. The matter could go all the way to the Judicial Committee of the Privy Council. There is no stipulated timeframe for the court to arrive at a decision. 282. The judicial remedy/appeal process is always open to the taxpayer or any third party who is aggrieved by any action of the Revenue. This process can take between 6months to one year or more depending on how far the appeal is taken.
C. Exchanging Information
Overview
286. Jurisdictions generally cannot exchange information for tax purposes unless they have a legal basis or mechanism for doing so. The legal authority to exchange information may be derived from bilateral or multilateral mechanisms (e.g.double tax conventions, tax information exchange agreements, the Convention on Mutual Administrative Assistance in Tax Matters) or arise from domestic law. Within particular regional groupings information exchange may take place pursuant to exchange instruments applicable to that grouping (e.g.within the EU, the directives and regulations on mutual assistance). 287. Jamaica has EOI agreements with 26 jurisdictions26, consisting of 11 bilateral tax treaties27, CARICOM Multilateral Tax Treaty and 7 Tax Information Exchange Agreements. The CARICOM Multilateral Tax Treaty was signed by Jamaica and 10 other jurisdictions. Jamaica has signed protocols to its tax treaties with Norway and Sweden to bring the EOI arrangement to international standard with regard to exchange of information. Jamaica has taken all the necessary steps to bring the signed agreements into force within a reasonable period of time. Jamaica should enter into EOI agreements with all relevant partners and should respond to requests for entering into EOI agreements from all relevant partners in a timely manner. 288. The information exchanged with Jamaica is protected by confidentiality obligations imposed under the EOI agreements as well as Jamaicas domestic legislation. Under Jamaicas domestic law, there are penalties applicable in the event of a breach of the confidentiality obligations. The rights and safeguards of taxpayers and third parties provided under the EOI agreements also conform to the international standard.
26. 27. Jamaicas EOI relationship with Denmark and the USA is based on DTC as well as TIEA. Jamaica also has a tax treaty with Switzerland. However, this treaty does not have an exchange of information article and is thus not considered in this analysis.
and states that the Contracting States may agree to an alternative formulation of this standard that is consistent with the scope of the Article (e.g.by replacing foreseeably relevant with necessary or relevant). In view of this recognition of term necessary, all the agreements meet the foreseeably relevant standard. 292. One of Jamaicas agreements with Germany provides for the exchange of information that is necessary for carrying out the provisions of the agreement, but does not specifically provide for the exchange of information in aid of the administration and enforcement of domestic laws. 293. Therefore, all but one of Jamaicas agreements meets the foreseeably relevant standard. 294. In practice, Jamaica interprets the term foreseeable relevance in accordance with the interpretation provided in the commentary to Article26 of the OECD Model Tax Convention and the Commentary to the Model Agreement on Exchange of Information on Tax Matters. In addition, all incoming EOI requests are processed according to the guidelines provided in the Jamaicas EOI manual which is based on the OECDs Manual on the Implementation of Exchange of Information Provisions for Tax Purposes.
28. Global Forum has completed peer reviews of Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, St.Kitts and Nevis, St.Lucia, St.Vincent and the Grenadines, and Trinidad and Tobago.
In the Phase1 reports of Antigua and Barbuda, Barbados, Belize, St.Vincent and the Grenadines and Saint Kitts and Nevis, no deficiencies with regard to element B.1 were identified and the element were assessed as in place for all these jurisdictions29. This suggests that all these 5 jurisdictions would be able to obtain all types of information under their respective domestic law.
299. It is recommended that Jamaica should take necessary measures to bring the exchange of information article in the CARICOM Multilateral Tax Treaty to be in line with Article26(5) of the OECDModel Tax Convention.
In force (ToRC.1.8)
309. With the exception of the new DTC protocols signed with Norway and Sweden (signed on 4December 2012) and the TIEAs with Denmark, Faroe Islands, Finland, Greenland, Iceland (signed on 4December 2012) and Macau, China (signed on 5October 2012), all other treaties and TIEA are in force. Jamaica has taken all the necessary steps to bring these agreements into force. In addition, Jamaica has negotiated a tax treaty with the Netherlands Antilles and this was initialled on 21May 2009 in Kingston which contains an exchange of information provision similar to that concluded with Spain. Cabinets approval to sign the treaty was delayed as Netherlands Antilles (Curacao) subsequently became autonomous and affected its identity. In addition, there was also a change of Government in Jamaica which gave rise to the need for ratification of all outstanding matters by the new Cabinet. It is expected that the treaty will be ratified by September 2013.
312.
Jamaicas agreements are shared with a variety of jurisdictions, including: 5 of its 7 primary main trading partners (United States, Canada, United Kingdom, France, Trinidad and Tobago; but not the Netherlands or Russia); 23 of the 119 Global Forum member jurisdictions; 11 of the 34 OECD member economies; 5 of the 19 G20 members (United States, Canada, China, Germany and France); 7 of the 27 EU members; 11 counterparties in North America and the Caribbean, 12 in Europe, 3 in Asia and one in South America.
313. Jamaica has a fairly good tax treaty network covering its major trading partners, but not with all the significant economies in its region with whom it has sizeable business, such as Brazil and Venezuela. Jamaica is planning to develop an international financial services centre; therefore, it is necessary to have tax treaties in place with other major investing economies. 314. One Global Forum member has indicated that it approached Jamaica through Diplomatic Channels on two occasions in February and December 2012 for the purpose of negotiating a TIEA. Jamaica has yet to respond to the request when the onsite visit was conducted in May 2013. Jamaican
authorities advised that they have contacted the Global Forum member in July 2013 and are currently reviewing the proposed agreement. Jamaica has also highlighted that besides the one Global Forum member, they have also received another similar request from another Global Forum member which they have also responded to the request in July 2013. 315. Jamaica has concluded negotiations for a proposed Double Taxation Agreement (DTA) with Mexico and is to seek Cabinets approval to sign the DTA. The negotiations with South Africa and Argentina for a Tax Information Exchange Agreement (TIEA) have also been concluded and the texts of these two agreements are likely to be initialled soon. Jamaica is in contact with the Seychelles, Kuwait and Ukraine to begin DTA negotiations.
Determination and factors underlying recommendations
Phase1 determination The element is in place. Factors underlying recommendations Recommendations It is recommended that the Jamaican government continue to conclude agreements with additional relevant partners. Phase2 rating Largely Compliant Factors underlying recommendations Jamaica has not always responded to requests for negotiations to conclude EOI agreement in a timely manner. Recommendations Jamaica should respond to all requests to negotiate EOI agreements in a timely manner.
C.3. Confidentiality
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received.
to that of the ITA (see SectionB.1). These provisions allow the Minister to authorise the disclosure of information to any person pursuant to any other law. There are no legislative rules governing the exercise of the Ministers authority to disclose information to persons in an official capacity. However, in accordance with hierarchy of Jamaican laws, the provisions of a treaty which has been enacted into Jamaican law prevail over the provisions in other laws. Thus, regardless of the Ministers power to authorise communication of information to any person, the confidentiality requirements within the treaties will ensure this does not happen with respect to international exchange of information. Jamaica has advised that the information obtained under the provisions of the EOI agreements is strictly disclosed only to the persons authorised to use such information under the respective EOI agreement. 321. Pursuant to the provisions of the section17(H)(2)(a) of the Revenue Administration Act, the Minister may authorise another person to receive information. In such a case, an instrument is drafted in which the Minister authorises the tax authority to give information to persons who are not revenue officers under the act.
Declined for valid reasons Failure to obtain and provide information requested
* A request is regarded as a single request irrespective of the number of subjects involved for which information is requested. ** The time periods in this table are counted from the date of receipt of the request to the date on which the final response was issued.
30.
Jamaica counts each letter of information request as a single request irrespective of the number of persons involved.
333. One of Jamaicas EOI partners has indicated that they have received responses in a timely manner to all but one of the requests made during the period of review. For the one request seeking banking information of a company, the partner indicated that the information was provided by Jamaica after a lapse of more than 1year and no updates were provided. In fact, the EOI request was received by Jamaica on 23February 2010 and it was responded to by Jamaica in March 2012.
341. The Senior Exchange of Information Officer is responsible for checking the incoming EOI requests received from Jamaicas treaty partners meets the various requirements under the respective treaties or agreements. He also has end-to-end responsibility and has to monitor and track all EOI requests from the time the EOI Unit receives it until a complete response is furnished to the requesting jurisdiction. The Senior Exchange of Information Officer works under the direct supervision of the General Manager of the EOI Unit who is in charge of managing the daily operations of the Unit. He also has the additional responsibilities of managing the audits of high net worth individuals. The EOI Unit is supervised by the Senior General Manager of the Large Taxpayer Office. He regularly provides technical and advisory support to the EOI Unit. The EOI Unit is ultimately supervised by the Deputy Commissioner General of Operations who is also responsible for allocating resources and infrastructure to the EOI Unit. 342. The offices of the Deputy Commissioner General of Legal Support, Director of Legislation and Treaty Services, Senior Legal Counsel of Legislation and Treaty Services, Senior Technical Specialist and Technical Specialist in the TAJ also support the functioning of the EOI Unit by providing technical and legal advice as and when it is required by the EOI Unit. The officers in the EOI Unit as well as those officers supporting the work of the EOI Unit are very experienced tax officials with either legal or finance backgrounds. They also have vast experience in conducting field audits and investigations of taxpayers. 343. The officers working in the EOI Unit have received specialised training on exchange of information. The General Manager-Large Individual Unit and EOI has participated in the EOI events organised by the Global Forum, the CIAT and the World Bank in Jamaica, Mexico, Florida and Barbados. The Senior EOI Officer has attended the EOI workshops conducted by the CIAT and TAJ in Jamaica. The TAJ has organised an EOI awareness seminar recently in Jamaica to spread awareness of the importance of the exchange of information in tax matters and sensitise various stakeholders involved in the process of gathering of information for exchange of information purposes.
information from the requesting jurisdiction in any case during the period of review (i.e.1July 2009 to 30June 2012). They have also not rejected any request on basis that the request does not meet the foreseeably relevant standard during the period of review. 350. When the review of the request is completed and a decision is taken to deal with the request, the Senior EOI Officer will evaluate whether the requested information is available within the TAJ. If the information is available within the TAJs database or physical files, the information will be obtained directly by the Senior EOI Officer if he has direct access to the database or file or through the relevant officers having access to the database or file. The information will usually be retrieved within 2 business days. 351. If it is evaluated that the information is not available within the TAJ, and it is determined that an audit or an investigation and intelligence has to be conducted to collect the information, the Senior EOI Officer/General Manager of EOI Unit will refer the case to the audit team or the investigation and intelligence department to conduct the necessary action to collect the required information. The TAJ does not inform the subject of audit/investigation that the information sought is requested by its EOI partners or the purpose of conducting the audit/investigation. The timeframe for completing the audit and the investigation will generally depend on the complexity of the case. Jamaica has highlighted that in one of the EOI request received from its peer, it has taken an auditor, working full-time for 6months to collect the requested information. 352. If the holder of information or the taxpayer where an audit has to be conducted resides in a city other than Kingston, the request is forwarded to the Regional Tax Office who will be responsible for conducting the audit and obtaining the information for the EOI Unit. Depending on the specific information required to be collected by the Regional Tax Office, the EOI Unit may either inform the Regional Tax Office of the specific information required to be collected without providing the EOI request or the EOI Unit may provide the EOI request if it is necessary for the Regional Tax Office to establish the context of the information sought. Similarly, the Regional Tax Office does not inform the subject of audit/investigation that the information sought is requested by Jamaicas EOI partners. 353. Once the information sought is obtained, the information is fully analysed to check for its sufficiency and quality. If the information is sufficient, a reply is drafted by the Senior EOI Officer, which is sent to the requesting competent authority through the General Manager of the EOI Unit. If the response received from the audit team or the investigation and intelligence department is insufficient, the General Manager will inform the respective General Manager of the audit team or the investigation and intelligence department to conduct further actions to obtain the required information.
Conclusion
356. Jamaica has been able to respond to an EOI request within 90days in 25 out of 28 cases during the period of review. For remaining 3 cases which took more than 90days, the peers have indicated that Jamaica has not provided a status update. This situation refers to EOI requests received prior to setting up of the EOI Unit. Now, the EOI Unit is staffed adequately with qualified and trained personnel who are responsible for the execution of all EOI requests. Appropriate standard operating procedures and monitoring mechanisms have also been put in place to ensure effective EOI with Jamaicas EOI partners. 357. Jamaica is encouraged to finalise the drafting of its EOI manual and to share the manual with all relevant officials to enable them to fully understand their roles and how they could utilise Jamaicas EOI network for making outbound EOI requests. Further, all the correspondence with foreign tax authorities should be made by the duly authorised Competent Authority or their authorised representatives and a list of such authorised representatives should be sent to all EOI partners and updated regularly whenever there are any changes. 358. At present, the EOI unit is effectively managed by two officials. The workload of the EOI Unit is likely to increase after the signed EOI agreements come into force or new agreements are signed by Jamaica, Therefore, Jamaica is encouraged to monitors the workload of the EOI Unit and enhance the resources of the EOI unit, if needed, so they can continue to exchange information effectively.
Factors underlying Recommendations recommendations Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1) Determination Phase1 determination: The element is in place, but certain aspects of the legal implementation of the element need improvement. Information is not required to be maintained by a company nor is it otherwise available to the competent authority that identifies the persons in an ownership chain where a legal owner in a public company acts on behalf of other person as a nominee or under similar arrangement. There are insufficient mechanisms in place to ensure the availability of information identifying the owners of share warrants to bearer that may have been issued by a public company. Jamaica should establish a requirement that information is maintained indicating the person on whose behalf any legal owner holds his interest or shares in the public company or body corporate.
Jamaica should take necessary measures to ensure that robust mechanisms are in place to identify the owners of these share warrants to bearer.
It is not clear whether information identifying partners of a limited partnership, which does not carry on a business in Jamaica or liable to tax in Jamaica, is consistently available with the Public Record Office in practice.
Factors underlying recommendations It is not clear whether the mechanisms that are in place to ensure that information identifying the settlor(s) and beneficiaries of a trust is available with the relevant authorities are effective in practice.
Recommendations Jamaica should put in place proper and robust mechanisms to ensure that information identifying the settlor(s) and beneficiaries of a trust is fully available with either the relevant authorities or the trustee.
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2) Phase1 determination: The element is in place. Phase2 rating: Largely Compliant During the period of review, the penalties provided under the relevant tax laws and commercial laws appear to be insufficient in providing an effective deterrence against non-compliance. The enforcement actions undertaken by Jamaican authorities also do not appear to be adequate or effective in ensuring the compliance with the filing and reporting obligations under the relevant laws. It is recommended that Jamaica reviews the adequacy of the penalties provided under the relevant commercial laws to ensure that they are effective in providing deterrence against non-compliance of the filing and reporting obligations. In addition, the Jamaican authorities should review its internal procedures for carrying out the enforcement actions to ensure that the filing and reporting obligations are complied with to ensure the availability of accounting information of all relevant entities and arrangements. Jamaica should monitor the effectiveness of the new law and ensure that appropriate enforcement actions are conducted by the relevant authorities on a regularly basis.
The amendments to the Revenue Administration Act to address the lack of express obligations to maintain underlying documentations and to retain accounting records and documents for at least 7years were passed after the review period and onsite visit and the effectiveness of the new law could not be ascertained or verified.
Jamaica should put in place appropriate procedures to implement the new access powers provided under the amended Revenue Administration Act and monitor its effectiveness.
The rights and safeguards (e.g.notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2) Phase1 determination: The element is in place.
Factors underlying recommendations The amendments to the Revenue Administration Act to address the prior notification of taxpayer issue were approved by the Jamaican Parliament after the review period and the onsite visit and the effectiveness of the implementation of the new law could not be ascertained or verified.
Recommendations Jamaica should put in place appropriate procedures to implement the exceptions provided under s.17G(4A) of the amended Revenue Administration Act and ensure that the exceptions can be exercised without obstacle by the competent authority.
Exchange of information mechanisms should allow for effective exchange of information. (ToR C.1) Phase1 determination: The element is in place. Phase2 rating: Largely Compliant The amendments to the Revenue Administration Act to address the domestic tax interest requirement were passed by the Jamaican Parliament after the review period and the onsite visit and the effectiveness of the implementation of the new law could not be ascertained or verified. Jamaica should put in place appropriate procedures to implement the new access powers provided under the amended Revenue Administration Act and monitor its effectiveness.
The jurisdictions network of information exchange mechanisms should cover all relevant partners. (ToR C.2.) Phase1 determination: The element is in place. It is recommended that the Jamaican government continue to conclude agreements with additional relevant partners. Jamaica has not always responded to requests for negotiations to conclude EOI agreement in a timely manner. Jamaica should respond to all requests to negotiate EOI agreements in a timely manner.
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3) Phase1 determination: The element is in place. Phase2 rating: Compliant
ANNEXES 117
Paragraph 35
Not all of the free zones mention is operational; most have closedonly the Montego Bay free zone is operational
Paragraph 43
The August 31 amendment clarified ambiguities in the July 15th act.
Paragraph 206
The RAA amendments of July 15th empowers the commissioner general to access information from all public officers, the RAA amendments of 2011 deleted all references to commissioners. The authority is centralised in the functions of the commissioner generalwho delegates to the deputy commissioner generals. The amendment also removed references to TASD and TAAD as separate departments. The Tax Administration Jamaica was born in 2011; operating under the central government The Tax Administration Jamaica Act will transform the TAJ to a semiautonomous body. Please delete all references to TASD and TAAD.
Paragraph 212
Postal Workers are public officers within the meaning of the RAA
31. This Annex presents the jurisdictions response to the review report and shall not be deemed to represent the Global Forums views.
118 ANNEXES
Paragraph 339
The information is not entirely correct, Jamaica has always had a competent authority duly authorised by law. The officer appointed in 2010was re-assigned to the Ministry of Finance in 2012. Where requests were forwarded to her, she would send them to the EOI unit that is where the delay occurred. Jamaica has been exchanging information since 1976 long before an EOI unit however we are now doing it in accordance with the current standard.
Paragraph 346
4th sentence should readHe also has the additional responsibilities of managing the audit units of the large and high net worth individuals. 5th sentence should readThe Large/ high net worth individuals and EOI units is supervised by . 6th sentence should read.He regularly provides technical and advisory support to both units.
Paragraph 348
2nd sentence should read. The General Manager - Large/ high net worth individuals and EOI unit has participated in . 3rd sentence should read.Tax Administration Jamaica EOI unit has organised.
Paragraph 354
The preliminary review to ensure that the request conforms to the domestic legislation and the relevant EOI agreement is carried out by the EOI General Manager.
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Jurisdiction 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 United Kingdom Germany Canada United States Israel Sweden Denmark Norway CARICOM 31 France China Spain Macau, China Faroe Island Finland Greenland Iceland
Type of EoI arrangement Double Taxation Convention (DTC) DTC DTC DTC TIEA DTC DTC DTC Protocol DTC TIEA DTC DTC Protocol Multilateral DTC DTC DTC TIEA TIEA TIEA TIEA TIEA
Date signed 16.03.1973 08.10.1974 30.03.1978 21.12.1980 18.12.1986 29.06.1984 13.03.1985 04.12.2012 16.08.1990 04.12.2012 30.09.1991 04.12.2012 06.07.1994 09.08.1995 04.07.1996 08.07.2008 05.10.2012 04.12.2012 04.12.2012 04.12.2012 04.12.2012
Date entered into force 31.12.1973 13.11.1976 02.04.1987 29.12.1981 18.12.1986 13.09.1985 07.04.1986 Not in force 24.10.1991 Not in force 02.11.1992 Not in force 30.11.1994 21.05.1998 16.03.1997 16.05.2009 Not in force Not in force Not in force Not in force Not in force
32.
Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, St.Kitts and Nevis, St.Lucia, St.Vincent and the Grenadines and Trinidad and Tobago.
120 ANNEXES
Commercial Laws
The Companies Act 2004 The Co-operative Societies Act 1950 The Friendly societies Act 1968 The Partnership(Limited) Act 1853 The Trustees Act 1897
Taxation Laws
The Income Tax Act 1955 The Foreign Sales Corporation Act 1984 The Hotel (Incentives) Act 1968 The International Finance Companies(Income Tax Relief) Act 1971 The Revenue Administration Act 1985 The Transfer Tax Act 1971 The Tax collection Act 1867
Banking Laws
The Banking Act 1992 The Bank of Jamaica Act 1960 The Financial Institutions Act 1992
ANNEXES 121
Other
The Building Societies Act 1955 The Insurance Act 2001 The Jamaica Export Free Zones Act 1982 The Legal Profession Act 1972 The Limitation of Actions Act 1881 The Trustees, Attorneys and Executors (Accounts and General) Act 1904 The Public Accountancy Act 1970 The Record Office Act 1879 The Record of Deeds, Wills and Letters Patent Act 1681 The Unit Trusts Act 1971
122 ANNEXES
Annex 4: Overview of Commercial Laws and Other Relevant Factors for Exchange of Information
Relevant Laws
The Revenue Administration Act 1985 (the RAA) deals with the administration of the revenue department and provides for the creation of five administrative departments namely; Inland Revenue Department, Revenue Protection Department, Tax Administration Services Department and Customs Department. s.9(d) of the Act refers to safeguarding the interest of Jamaica in the negotiation of international taxation agreements. The negotiation of international taxation agreements is the responsibility of the tax administration services department. The Income Tax Act 1955 (the ITA) regulates the taxation of income of residents as well as non-residents in Jamaica. It is administered by Commissioners appointed under the provisions of the Revenue Administration Act 1955. Section83 provides powers to the Minister to enter into tax treaties. Section83(4) overrides the secrecy provisions imposed on the tax authorities by s. 4 of the Act and allows disclosure of information to the authorities of other territories under the arrangement. It is also provided that the provisions of the arrangement shall have effect in relation to income tax notwithstanding anything contained in any enactment. The Companies Act 2004 repealed and replaced the previous Companies Act. It empowers the Government to regulate all company matters including formation, capital, functioning, audit, supervision, returns, mergers, takeovers and liquidation of companies. The Partnership (Limited) Act 1853 deals with the law relating to limited partnerships, i.e.partnerships where one or more partners have unlimited liability for partnership debts (general partners), and one or more partners have liability for those debts only up to the amount of capital they have subscribed (special partners). Limited partnerships are not allowed to carry on banking or insurance businesses. Jamaica has no statute law on ordinary partnerships, i.e.partnerships in which all the partners have unlimited
ANNEXES 123
liability for the partnerships debts. Ordinary partnerships are governed by the common law of England which Jamaica inherited, and by the partnership agreement. A partnership may not have more than 20 members. The Registration of Business Names Act 1934 This Act makes it compulsory for every person to register the business name with the Registrar of Companies of Jamaica. The Trustees Act 1897 provides for the, various powers and duties of trustees, power of the courts etc. Under this Act trust does not include the duties incident to an estate conveyed by way of mortgage; but with this exception the expressions trust and trustee include implied and constructive trusts, and cases where the trustee has a beneficial interest in the trust property, and the duties incident to the office of personal representative of a deceased person. The Securities Act 1993 governs the law relating to the business in securities including mutual funds. It provides for the creation of commission which is responsible for the general administration of the Act. It also provides for the creation and regulation of the central security depositories. The Proceeds of Crime Act 2007 (POCA) consolidated all Jamaican legislation with respect to matters related to money laundering and forfeiture. POCA permits any crime to constitute a predicate offence for money laundering. Section92 provides that money laundering is an act comprising dealings of any kind with criminal property. Both criminal property and criminal conduct are defined by the POCA.
Government authorities
The Ministry of Finance and the Public Service (MOFPS)33 (now the Ministry of Finance and Planning MOFP) has overall responsibility for the Governments fiscal and economic policy framework and collecting and allocating public revenues. The MOFPS is responsible for the effective regulation of the countrys financial institutions and its 14 divisions including financial regulation, corporate services, taxation policy, financial investigations and revenue protection. Tax Administration34 Jamaicas Tax Administration underwent a major restructure under the Tax Administration Reform Project in 1999 and 6 tax departments were created: Director Generals Executive Office The Director General, Tax Administration, oversees and guides the operations of the Jamaica Tax Administration;
33. 34.
www.mof.gov.jm/. www.jamaicatax.gov.jm/.
124 ANNEXES
Inland Revenue Department It has full responsibility for all compliance, tax collections & taxpayer service functions; Jamaica Customs Department has responsibility to collect revenue, facilitate trade and protect the borders of the country; Tax Administration Services Department provides centralised services for the tax departments; Taxpayer Appeals Department is responsible for processing appeals to decisions made by tax commissioners. They also have responsibility to process waiver applications ; Taxpayer Audit and Assessments Department brings together the audit & assessment functions of the former Income Tax, General Consumption Tax, Stamp Duty & Tax Departments and the Revenue Board.
The Bank of Jamaica35 (BOJ) was created by the Bank of Jamaica Act 1960 and is the Central Bank of Jamaica. The BOJ supervises banks, merchant banks, building societies, Cambios, bureaux de change and remittance companies and agencies and has comprehensive powers of enforcement and sanctions. It ensures that institutions within the financial sector comply with anti-money laundering and counter-terrorist financing provisions (AML/ CFT) and has issued the AML/CFT guidance note and FSC guideline for implementing the provisions of the POCA. The BOJ has supervisory oversight over institutions governed by the following pieces of legislation: Commercial Banks which are governed by the Banking Act; Near bank deposit-taking intermediaries, such as merchant banks, trust companies and finance houses licensed under the Financial Institutions Act; Building Societies/Institutions operating under The Industrial and Provident Societies Act which either take deposits and/or make loans.
These statutes provide the legal and policy parameters for the licensing and supervision of financial institutions. The primary legislation consists of the Bank of Jamaica Act 1960, the Banking Act 1992, and the Financial Institution Act 1992 and the Building Societies Act 1897. The Ministry of Industry, Investment and Commerce36 This ministry is responsible amongst other things, for the Companies Act and Registration of Business Names Act, which are important for the purpose of this report. It
35. 36. www.boj.org.jm/bank_home.php. www.jis.gov.jm/commerce_science/index.asp.
ANNEXES 125
is also the administrative and supervisory ministry for the companys office of Jamaica, registrar of co-operative and friendly societies and the Jamaica Free Zones. The Financial Services Commission (FSC) was established in August 2001 under the Financial Services Commission Act. It is the integrated regulator of financial services in Jamaica and administers the Insurance Act, Securities Act, Unit Trusts Act and Pensions (Superannuation Funds and Retirement Schemes) Act. The Registrar of Companies Jamaica has a centralised registry of companies, the Registrar of Companies. The Office of the Registrar of Companies is part of the Ministry of Industry, Commerce & Technology. (Jamaica may clarify what is the correct name of this ministry, as website shows both names). The registrar of companies registers local and overseas companies, industrial and provident societies and individuals carrying on business in Jamaica. The registrar of companies maintains a website37on which the subscribers may view company documents, business names registration, company names registration, particulars of directors, change of directors and registered offices notices. The Financial Investigation Division38 This Division within the Ministry of Finance and the Public Service was established in December 2002. It focuses on the need to deter the use of Jamaicas economy for money laundering and other financial crimes thereby contributing to a stable financial sector and an investor friendly environment. The CFATF concluded the third round mutual evaluation of Jamaica in October 2005. In this evaluation Jamaica was rated partially compliant or non-compliant with 18 Recommendations. The CFATF follow-up report of March 2009 states that, any dealing which permits a person to benefit from the act of tax evasion would under POCA constitute money laundering offence. The findings of the CFATF relevant to the issue of exchange of information for tax purpose are listed below: Regulations6 of The POCA (MLP) Regulations, 2007 specifically prohibits financial institutions from maintaining anonymous, fictitious or numbered accounts. Paragraph93 of the BOJ (AML/CFT) Guidance note also deals with this issue; Regulations11, 12 and 13 of the POCA (MLP) Regulations requires procedures to be in place to ensure that the identities of both principals and agents are obtained, and the authorisations of agents are obtained in the case of transactions are conducted by a person on behalf of another;
37. 38.
www.orcjamaica.com/profile/. www.mof.gov.jm/fid.
126 ANNEXES
Regulation13(c) of the POCA (MLP) Regulation, 2007 stipulates that satisfactory measures should be in place to know the identity of the settlor, legal owner or other person who exercises effective control of the legal arrangement as the case may require, or the beneficial owner is established, in the cases of any transaction involving any settlements, trusts or other types of legal arrangements; Regulation7(1) of the POCA (MLP) Regulations prohibits the continuation of the business relationship unless customer information is updated at least once every five years; Regulation7(2) of the POCA(MLP) Regulations require customer due diligence measures comprising transaction verification procedures to be applied particularly in the circumstances specified in regulation7(3) which include where there is a doubt about the accuracy of any previously obtained evidence of identity. The continuity of business relationship is prohibited if this requirement cannot be fulfilled by the financial institution.
Record keeping
Regulation14 of POCA (MLP) Regulations, 2007 mandate the retention of both identification records and transaction records by financial institutions for the prescribed period of 5years commencing from the date on which the relevant financial business was completed or the business relationship terminated whichever is later. Paragraph46 of the BOJ AML/CFT Guidance Note also requires financial institutions to ensure that the due diligence checks and reviews and investigations are available to the competent authority and designated authority.
ANNEXES 127
Traders) and bureaux de change. The number of approved cambio locations is 153 operated by 70 entities. The foreign banks have substantial presence in the commercial and merchant banking business. The Financial Service Commission is currently responsible for supervising and monitoring a total of 1980 licensees and registrants as well as 522 pensions funds and retirement schemes. The FSC, like the BOJ has comprehensive powers of enforcement and sanctions and conducts examinations of and obtain information from its licensed institutions. The number of companies licensed to carry various businesses is: Securities dealer/investment advisors (individuals: eight and companies: 49), Licensed insurance companies (Life: 4 and General: 12), Licensed pension plan administrators:22. Jamaica liberalised its foreign exchange market by eliminating capital controls and the limits on access to foreign exchange by local residents in 1991 on repealing the foreign exchange control Act 1954. The exporters and other foreign exchange earners are allowed to hold local and foreign currency accounts for all payments. Foreign currency is allowed to be exchanged through licensed authorised dealers only. No approval is required for repatriation of profits and dividends. Agreements involving the payment of technical assistance fees, royalties, management fees, and trademark and patent fees must reflect arms-length consideration for tax deduction to be available. The Jamaica Stock Exchange39 was incorporated as a private limited company in August 1968. The Exchange trades in securities, ordinary/ common, preference and corporate bonds. Government bonds are traded in the Bank of Jamaica regulated over the counter market, principally by stockbroker members and are not listed on the Exchange. Stock broking is restricted to broker members who trade both as agents and as principals. Currently, over 50 companies are listed on the Jamaica Stock Exchange. The stock exchange has eleven listed stock brokers. The Jamaica Stock Exchange also has detailed rules relating to the submission of information by companies listed on the Exchange, including quarterly and annual reports and financial statements. These documents are publicly available from the Exchange or its website. The legal and accountancy professions are well regulated in Jamaica. The attorneys-at-law operate under the Legal Profession Act 1972, and the Canons of Professional Conduct and Etiquette of the General Legal Council. They are required to register with the Registrar of Supreme Court of Jamaica as per the Legal Profession Act 1972. The non-compliance with the standards of conduct can result in suspension or revocation of the right to practice. The Legal Profession (Accounts and records) Regulations1999 requires submission of annual accounts by members. The accountancy profession operates under a
39. www.jamstockex.com/index.php.
128 ANNEXES
code of ethics issued by the Institute of Chartered Accountants of Jamaica, regulated by the Public Accountancy Act 1970. The law requires the registration by all public accountants providing services in Jamaica. The Jamaica has another Institute of Chartered Secretaries and Administrators, whose members provide services relating to company formation. Real estate dealers are governed by the requirements of the Real Estate Dealers and Developers Act, which are enforced by the Real Estate Board.
ANNEXES 129
Bank of Jamaica
Representatives of the Bank of Jamaica
130 ANNEXES
OECD PUBLISHING, 2, rue Andr-Pascal, 75775 PARIS CEDEX 16 (23 2013 74 1 P) ISBN 978-92-64-20614-4 No. 60983 2013-01
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