Вы находитесь на странице: 1из 134

GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES

Peer Review Report Phase 2 Implementation of the Standard in Practice


JAMAICA

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

ISBN 978-92-64-20614-4 (print) ISBN 978-92-64-20615-1 (PDF)

Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews ISSN 2219-4681 (print) ISSN 2219-469X (online)

Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda.

OECD 2013

You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to rights@oecd.org. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at info@copyright.com or the Centre franais dexploitation du droit de copie (CFC) at contact@cfcopies.com.

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

ABOUT THE GLOBAL FORUM 5

About the Global Forum


The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 120 jurisdictions, which participate in the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transparency and exchange of information for tax purposes. These standards are primarily reflected 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 as updated in 2004. The standards have also been incorporated into the UN Model Tax Convention. The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. Fishing expeditions are not authorised but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest. All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase1 reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange of information, while Phase2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined Phase1 and Phase2 reviews. The Global Forum has also put in place a process for supplementary reports to follow-up on recommendations, as well as for the ongoing monitoring of jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once adopted by the Global Forum. For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the published review reports, please refer to www.oecd.org/tax/transparency and www.eoi-tax.org.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Introduction 11

Introduction

Information and methodology used for the peer review of Jamaica


13. The peer review of Jamaica has been undertaken across two assessments; the 2010 Phase1 Report and the 2013 Phase2 assessment. The assessments of the legal and regulatory framework of Jamaica and the practical implementation and effectiveness of this framework were based on the international standards for transparency and exchange of information as described in the Global Forums Terms of Reference,5 and were prepared using the Global Forums Methodology for Peer reviews and Non-Member Reviews.6 14. The 2010 Phase1 report of Jamaica, which was adopted and published by the Global Forum in September 2010, was based on information available to the assessment team including the laws, regulations, and exchange-of-information mechanisms in force or effect as at May 2010, other materials supplied by Jamaica, and information supplied by partner jurisdictions. 15. The Phase2 assessment is based on the laws, regulations, and exchange of information mechanisms in force or effect as at 19August 2013, Jamaicas responses to the Phase2 questionnaires, supplementary questions, and other materials supplied by Jamaica, information supplied by exchange of information partners and explanations provided by Jamaica during the onsite visit that took place from 1 to 3 of May 2013 in Kingston. During the on-site visit, the assessment team met with officials and representatives of relevant Jamaica government agencies including the Ministry of Finance and Planning, the Tax Administration of Jamaica, the Companies Office of Jamaica, the Registrar Generals Department, the Bank of Jamaica, the Financial Service Commission,
5. 6. See Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information for Tax Purposes (full text available at www.oecd. org/dataoecd/37/42/44824681.pdf). See Methodology for Peer reviews and Non-Member Reviews (full text available at www.oecd.org/dataoecd/37/41/44824721.pdf).

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

http://statinja.gov.jm/population.aspx, accessed 29March 2013. www.mfaft.gov.jm/?q=caribbean-community-caricom.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

Overview of the financial sector


38. The table below summarises the size and integration of Jamaicas financial sector as at 31December 2012.
Banks Number of institutions Total Assets Deposits International Links USD (in million) % of deposits Non-resident % of assets Foreign-owned Subsidiaries abroad 7 7100 Other Credit Institutions 49 3162 2088 14.1% 8.7% 7 Securities 32 5512 n/a n/a 51.9% 2 Insurance (Life & General) TOTAL 17 2812 n/a n/a 90.0% 3 105 18586 6872 7.8% 66.9% 16

Total: USD (in million) 4784 5.1% 95.2% 4

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 21

Compliance with the Standards

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

22 Compliance with the Standards: Availability of Information


47. Information is not statutorily required to be maintained by a company and may also not be available with any other authority that identifies the persons in an ownership chain where a legal owner of a company acts on behalf of another person as a nominee or under similar arrangements. Beneficial ownership can nevertheless be investigated by the companies themselves, by the Minister as well as by tax authorities. 48. Companies incorporated outside Jamaica (foreign companies) are allowed to raise share capital and issue debentures in Jamaica. However, it is not mandatory for them to keep a branch register of their members who are resident in Jamaica. Foreign companies incorporated outside Jamaica but having central management and control in Jamaica are not required to provide the ownership information in Jamaica. 49. During the period of review, Jamaican law does not clearly require keeping of the underlying documents by all relevant entities and arrangements. To address this deficiency, Jamaica amended the Revenue Administration Act after the review period on 28June 2013 (the amendment came into force on 15July 2013) to provide for the obligations to maintain underlying documents by all relevant entities and arrangements. 50. Similarly, during the period of review, Jamaica did not have provisions in the legislation requiring retention of the accounting records by all the persons or by the authorities. To address this deficiency, Jamaica amended the Revenue Administration Act after the review period on 28June 2013 (the amendment came into force on 15July 2013) to expressly provide for the requirement that all entities and arrangements are required to maintain accounting records and underlying documents for at least 7years. 51. With regard to banking information, the Proceeds of Crime Act (POCA) and the Proceeds of Crimes (Money Laundering Prevention) Regulations2007 (POCA (MLP) Regulation2007 require banks and other financial institutions to keep transaction records and conduct customer due diligence. Consequently, information of account holders (as well as persons carrying out one-off transactions), including all records pertaining to the account holder, bank and other financial accounts and transactions is available. Regular enforcement measures have been taken by the Bank of Jamaica (BOJ) and the Financial Services Commission (FSC) to ensure availability of banking and other financial information. 52. Jamaica has enforcement provisions in its law to ensure the availability of identity, ownership and accounting information. While enforcement powers under the Companies Act have been exercised regularly by the Companies Office of Jamaica, it is noted that the level of non-compliance is relatively high. With regard to the enforcement powers under the Income Tax Act and the Revenue Administration Act, it is noted that regular enforcement actions

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 23

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.

A.1. Ownership and identity information


Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities.

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

24 Compliance with the Standards: Availability of Information


55. A company can also be classified as a private company or a public company. Section25 of the Companies Act defines a private company to mean a company which by its articles: restricts the right to transfer its shares and limits the number of its members to twenty other than the employee members; prohibits any invitation to the public to subscribe for any shares or debentures of the company; prohibits any invitation to the public to deposit money for fixed periods or payable on call whether bearing or not bearing interest; and subject to the exceptions provided for, prohibits any person other than the holder from having any interest in any of the companys shares.

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 25

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.

Ownership information of companies


63. Every company in Jamaica is required to keep a register of its members containing information about the names and addresses and the occupation of the members (s. 109 of the CA). A company having share capital is also under obligation to keep a statement of the shares held by each member, distinguishing each share by its number, and the details of payments made. The date at which each person was entered in the register as a member and also the date at which any person ceased to be a member. The register of members is generally kept at the registered office of the company but in no case it can be kept at a place outside Jamaica. 64. The company registers a transfer of shares or debentures of the company on the basis of receipt of a proper instrument of transfer and an entry of name of transferee is made in the register of members (s.75 of the CA). 65. The register of members is available for members as well as public for inspection and copying, on payment of a fee (free to shareholders) (s.112 of the CA). Similarly, a company which has issued debentures is required to keep a register of holders of debentures having various particulars including the name and addresses of the debenture holders (s. 84 of the CA) and this register of debenture holders is also available for public inspection (s.86 of the CA).

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

26 Compliance with the Standards: Availability of Information


66. Section52 of the Companies Act has a provision regarding submission of returns of additional allotments of shares to the registrar indicating among other things therein the names, addresses and description of the allottees and the amount, if any, paid or due and payable on each share. The copies of contracts are also required to be filed if shares are allotted as fully or partly paid up otherwise than in cash. 67. Section121 of the Companies Act puts an obligation on every company to file an annual return in the prescribed form set out in part II of fifth schedule. This requires a list of past and present members containing their names, addresses and occupations, number of shares held by them and also change in their shareholding since the date of last return. The information about the dates of registration of the transfers is also required in the form. 68. PartX of the Companies Act contains provisions relating to companies incorporated outside the Island and carrying on business within the Island. This may include companies not incorporated in Jamaica but having its central management and control in Jamaica. These companies are required, within one month of establishment of the place of business, to deliver to the Registrar for registration a certified copy of the charter, statutes or articles of the company, or other instrument constituting or defining the constitution and containing the name of the company, names and address of the directors or shadow directors of the company and particulars as are required in the register of directors of the company and the name and address of the resident person for receiving the notice (s.363 of the CA). The information on the shareholders/owners of the parent company is however not required to be provided. 69. Companies that have accounts with or carry out transactions through banks and financial institutions are required to provide the identity information to their bankers as per regulation7 of the POCA (MLP) Regulations2007 and PartIV of the Bank of Jamaica (BOJ) AML/CFT Guidance Notes. This information cannot be obtained directly from the banks or financial institutions by the competent authority for the purposes of exchanging information with foreign tax authorities under EOI arrangements, because s. 17G of the Revenue Administration Act 1985 requires the obtaining of a production order from the court. 70. All persons doing business in Jamaica are required to obtain a Taxpayer Registration Number (TRN) from the TRN office in Kingston (s.17D of Revenue Administration Act 1985). 71. Overseas companies are also required to obtain TRN by filing the completed Application for Taxpayer Registration (Organizations) signed by an Authorised Officer or the local representative. Documents are required

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 27

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.

Identity and ownership information of companies in practice Companies Office of Jamaica


75. The Companies Office of Jamaica (COJ), which acts in the capacity as the Registrar of Companies, is responsible for day-to-day administration of matters relating to companies and business names. This office functions under the Ministry of Industry, Investment and Commerce of Jamaica. 76. With regard to the obligation for Jamaican companies to maintain a register of its members under s.109 of the Companies Act, the COJ explained that they do not actively monitor whether this obligation is being properly carried out by companies. However, the COJ does monitor the obligations relating to the filing of annual returns by companies under s. 121 of the

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

28 Compliance with the Standards: Availability of Information


Companies Act where information concerning past and current shareholders is required to be filed in prescribed forms to the COJ. Presently, the submission of the annual returns is made in paper form (i.e.form 19A and 19B). Enforcement actions pursuant to s.353 of the Companies Act are taken against some companies and its directors who fail to file these annual returns (see further analysis on the enforcement action taken and the compliance rate in section A.1.6). The COJ currently keeps information in computerised databases. The paper annual returns are kept physically by COJ and are also converted into digital images since 1994 and are stored electronically in their databases. Presently, all documents filed with the COJ are kept indefinitely for active companies. For companies that are struck-off or wound-up, the COJ advised that the documents are kept for at least 20years after the companies are struck-off or wound-up. 77. Presently, the COJs website offers information on the name of companies.13 The COJ plans to provide more information on its website and this may include company documents, business names registration, company name registration, particulars of directors, change of directors and registered office notice to the subscriber of the services. These changes are expected to be implemented by 31March 2014. Members of the public are also allowed to request certified copies of documents from the COJ with payment of fees. 78. The EOI Unit within the TAJ has confirmed that they have received two EOI requests pertaining to identity and ownership information of companies during the period of review (i.e.1July 2009 to 30June 2012) and they have provided the requested information to the requesting jurisdictions.

Bearer shares (ToRA.1.2)


79. Jamaica does not allow for the issuance of bearer shares. There are, however, provisions for bearer share warrants in case of a company limited by shares if authorised by its articles (s. 82 of the CA). A share warrant entitles the bearer of warrant to the shares specified in the warrant and the shares may be transferred by delivery of a warrant (s.82(3) of the CA). The Companies Act provides that, in order to qualify as a private company, the company must limit the transferability of its shares (s. 25(1)(a) of the CA). Consequently, a company that has issued share warrants to bearer cannot be a private company. However, the restriction on transfer of shares does not apply to public companies and so public companies may issue share warrants to bearer. While Jamaican authorities have indicated that the issuance of share warrants to bearer is in abeyance in practice, the legal basis to issue such warrants is still in force. There are 1927 public companies in Jamaica as at 31December 2012. A person holding a bearer share warrant has a right
13. www.orcjamaica.com/profile/.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 29

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.

Nominee shareholder or similar arrangements


83. The terms of reference requires that jurisdictions should ensure that information is available to their competent authorities that identify the owners of companies and any bodies corporate. Owners include legal owners, and, in any case where a legal owner acts on behalf of another person as a nominee or under a similar arrangement, that other person, as well as persons in an ownership chain, to the extent that it is held by the jurisdictions authorities or is within the possession or control of persons within the jurisdictions territorial jurisdiction.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

30 Compliance with the Standards: Availability of Information


84. In Jamaican company law, the term nominee has not been defined but has been used in the context of a nominee of a body corporate, including of a banking company and a finance company. It is also used in defining the holding and subsidiary company. Section59 of the Securities Act provides for the investigation by the issuer from the shareholder, holding shares otherwise than as a beneficial owner to find out the beneficial owner and then confirming the holding from such owner. But, this enquiry by the issuer of shares is limited against the shareholders who have prescribed interest (10% of share capital) in the share capital. 85. In case of a private company, any person other than the shareholder is prohibited from having any interest in any of the companys shares except as provided in twelfth schedule (s.25(1)(e) of the CA). The twelfth schedule deals with the exception in the situations of death and for family settlement, disability, bankruptcies etc. for which information on the persons for whose benefits such shares are held must be maintained. Accordingly, the situations where shares in a private company may be held by nominees are fairly restricted and only shares of public companies may be held by nominees. There are 1927 public companies in Jamaica as at 31December 2012. 86. In case of a public company, the Securities Act 1993 has given powers to the company to investigate the ultimate (real) owners of the shares. The relevant excerpt of s.59 of the Securities Act is provided below: (3) Any issuer may by notice in writing require any member of the issuer to indicate in writing, within such reasonable time as is specified in the notice, whether any of the voting rights carried by any shares comprised in the relevant share capital of the issuer held by him are the subject of an agreement or arrangement under which another person is entitled to control his exercise of those rights and, if so, to give so far as it lies within his knowledge written particulars of the agreement or arrangement and the parties to it. (4) Where an issuer is informed in pursuance of a notice given to any person under subs. (3) that any other person is a party to such agreement or arrangements is mentioned in subs. (3), the issuer may by notice in writing require that other person within such reasonable time as is specified in the notice to give, so far as it lies within his knowledge, written particulars of the agreement or arrangement and the parties to it. 87. The Companies Act also provides for the Minister of Investment, Industry and Commerce, when there are good reasons to do so to appoint inspectors to investigate and report on the membership of a company for determining the true persons that are financially interested in the company or are able to control or materially influence the policy of the company (s.168

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 31

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).

Nominee shareholder or similar arrangements in practice


89. The COJ has advised that the provision in s.168 of the Companies Act which permits the Minister of Industry, Investment and Commerce to investigate the ownership of any shares or debentures of a company has not been invoked in practice.

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

32 Compliance with the Standards: Availability of Information


stock. Therefore, the ownership information with regard to the entities operating in the regulated fields would be available with the regulator. 91. The Proceeds of Crime (Money Laundering Prevention) Regulations of 2007 and related regulations provide for customer due diligence measures and further provide for verification procedures to be applied. The Revised 2009 BOJ Guidance Notes (Guidance Note on the Detection and Prevention of Money Laundering and Terrorist Financing Activities) provides measures for the identification of prospective customers. The measures require the following information to be obtained for corporate vehicles, whether locally incorporated or a foreign company other bodies corporate or partnerships formed in Jamaica or overseas: certificate of Incorporation or certificate of registration; articles of Incorporation; or Partnership Deed; directors resolution authorising companys management to engage in transactions; financial institutions mandate, signed application form, or an account opening authority containing specimen signatures; a financial statement of the business (audited, or in the case of companies incorporated and in operation for under eighteen months, in-house statements); a description of the customers principal line of business and major suppliers (if applicable); list of names, addresses and nationalities of principal owners, directors, beneficiaries and management officers, including evidence of the identity of the natural persons, that is to say, the individuals that ultimately own or control the corporate vehicle; group/corporate structure, where applicable.

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).

Ownership information held by service providers


93. Service providers including lawyers, accountants and agents providing services in relation to the formation of companies are not required to keep information on the ownership of the companies for which services are provided.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 33

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

34 Compliance with the Standards: Availability of Information


shall not include any unincorporated company, which was in existence on the seventeenth day of June eighteen hundred and sixty four. Section5 of the Act requires the name, surnames, nationality, the usual residence and the other business occupation (if any) of each of the individuals who are partners, and the corporate name and the registered office or principal office of every corporation which is a partner. Therefore according to this act, unlimited and limited partnerships having a place of business in Jamaica and carrying on a business will need to register with the Registrar of Companies and provide the aforementioned information, notably the names of the partners. According to the COJ, there are 20018 limited and general partnerships registered under the Registration of Business Names Act with the COJ as at 31December 2012. 99. Every registration or renewal of registration remains valid for three years from the date of certificate of registration and requires to be renewed. Section8 of the Act requires all the changes in the particulars of the firm to be provided to the Registrar. Section13 of the Act requires the registrar to issue a Certificate of Registration. Inspection of documents is allowed by the registrar (s.18 of the Registration of Business Names Act). Section9 of the Act provides the punishment for firms or persons making default as to particulars. 100. Considering the provisions of the Registration of Business Names Act, the identity information of the partners of the partnership should be available with the Registrar of Companies. This information should also be available with regard to partnerships formed outside Jamaica but having a place of business in Jamaica, as the requirement of registration is with regard to the place of business in Jamaica. 101. Jamaicas Stamp Duty Act 1937 also requires payment of stamp duty on all articles of co-partnership or other agreements to that effect. A copy of such agreement is stored at the Records Office, pursuant to sections 2 and 6 of the records Deeds, Wills and Patent Act. 102. It is possible to have a partnership in Jamaica with all non-resident partners. Sections363(1)(b), 363(3) and 365(1)(C) of the Companies Act require that foreign partnerships register using Form 31 as a foreign company and included in that registration is a requirement for information on the name of the foreign firm in the country of origin, the names of all foreign directors and their addresses and also the address of the foreign firm in the country of origin. In addition, foreign firms carrying on business in Jamaica must register their business names with the Registrar of Companies and provide information on the partners.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 35

Income tax law


103. Every person, including partnerships liable to pay tax, must register with the Registration Authority as required by s. 17D of the Revenue Administration Act (RAA). The ITA does not define partner or partnership, however, s.69 of the ITA provides the manner of taxation of income from a trade, profession or business carried on by two or more persons jointly. The partnership is not considered to be a separate taxable person, instead it is treated as a transparent entity through which partnership income flows to the partners and such share of income is included in the return of income of the partner. Section69(2) of the ITA sets forth an obligation on the precedent partner to make and deliver a return of income of the partnership. The income is required to be ascertained in accordance with the provisions of the ITA. The return shall contain the information about the names and addresses of the partners in the firm together with the amount of income allocated to the partners as per their respective shares. The ITA provides that when no partner is resident in Jamaica the return shall be made and delivered by the attorney, agent, manager or factor of the firm resident in the Island. The nonregistration of the partnership or non-delivery of the tax return is an offence under the ITA (s.69 of the ITA). 104. Partnerships are required to file a return of income and tax payable in form IT 03. This form is prescribed for organisations (unincorporated bodies other than life assurance) and building societies, trust estates, industrial and provident societies, deceased estates also use this form. The form requires the following information on the partners/beneficiaries in case of partnerships and estates: taxpayer registration number; name; basis of distribution of partnership income (salary, interest on capital, good used, private use car, residential occupation, share of balance and total share); and share of partnership, estate or trust income.

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

36 Compliance with the Standards: Availability of Information

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.

Identity information of partners of partnerships in practice


107. The Public Record Office (i.e.the Island Record Office) is an arm of the Registrar General Department. According to the Public Record Office, there are 18 deeds of partnerships recorded during the period from May 1993 to April 2010. However, the function performed by the Public Record Office is one of a depositary of information and records and not as a registrar of business. In this regard, all records filed by the depositors are kept in its original physical form and filed according to the classification of the document as declared by the depositor. It is not possible for the Public Record Office to confirm if there are only 18 limited partnerships formed in Jamaica as confirming this would entail going through approximately 3million records and deeds filed with the Public Record Office since the year 1664. There is no obligation on the limited partnership to file an annual return with the Public Record Office. In addition, as the Public Record Office only performs depositary functions, they neither enforce the filing of deeds of partnerships nor conduct audits to ensure that all limited partnerships that have filed the deeds of partnership continued to be in existence. 108. The Registration of Business Name Act provides that all partnerships (including both ordinary and limited partnerships) which carry on business in a name other than the first and surnames of the partners must be registered with the COJ. If it is not registered, every person responsible for contravening the Act is liable on summary conviction before a Resident Magistrate to a fine not exceeding JMD 15000 (approximately USD153) and in default of payment of the fine to imprisonment of up to 3months. The Act also gives the COJ power to apply to the Court to close a business whose name is not registered after serving three notices on the unregistered business. The Act also provides the power for the COJ to request information from a partner of a business. If the information requested is not provided, the person responsible for providing the information shall be liable on summary conviction before a Resident Magistrate to imprisonment for a term not exceeding 3months or to a fine not exceeding JMD 5000 (approximately USD51). 109. The physical application forms for registration of business names that contain the identity information of the partners have to be filed manually with the COJ. These application forms are stored indefinitely by the COJ until the registered business name is deregistered. The application forms are stored for a further period of 10years after the business name is deregistered.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 37

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

38 Compliance with the Standards: Availability of Information


114. The EOI Unit has confirmed that they have not received any EOI requests pertaining to identity information of partners of partnerships during the period of review (i.e.1July 2009 to 30June 2012).

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 39

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

40 Compliance with the Standards: Availability of Information


Island record office and any deed not so recorded is void. There are neither restrictions on nor special provisions for the creation of trusts in Jamaica for non-resident settlor or beneficiaries. There is no restriction for a resident of Jamaica to act as trustee of a trust formed under foreign law and this situation is covered in the Registration of Business Names Act, if such a trust has a place of business in Jamaica.

Income tax law


125. The Revenue Administration Act 1985 requires the trusts to obtain a taxpayer registration number. The completed application form Form 2 signed by a trustee, the trust deed, the TRN for each trustee and the ID for signatory officer are required to be filed. All trusts, except approved charitable trusts, are required to file income tax returns. The approved charitable trusts are required to file their annual financial statements to the Taxpayer Audit and Assessment Department. This also applies to trusts having nonresident settlors or beneficiaries. 126. Any payments made by the trustee out of the trusts income to the beneficiaries is subject to a withholding tax, unless the Commissioner authorises the trustee(s) to make the payments gross, after being satisfied that the beneficiary concerned is not obliged to file a tax return (s.6(6) of the ITA). In the tax returns the information about the share of estate or trust income allocated to all the persons is required to be given. 127. Trusts created under foreign laws will also have to register for tax purposes and deliver a tax return, if those have any taxable income (s.5 of the ITA) or statutory income (s.6 of the ITA) This situation will arise in cases where either the trustee is a resident of Jamaica or the trust assets are invested in Jamaica or the trust assets are administered from Jamaica. Trustees are responsible for compliance with the ITA (s.55 of the ITA). 128. The Proceeds of Crime (Money Laundering Prevention) Regulations 2007 provides that the satisfactory identity is required to be maintained by the regulated entity with regard to settlor, legal owner or other person who exercises effective control of the legal arrangement and also the beneficial owner in the case of a transaction involving a settlement, trust or other type of legal arrangement. 129. Another type of arrangement is the unit trusts. This is an arrangement for collective investment in Jamaica or elsewhere in any property under a trust deed which enables the beneficiaries to participate in the profits or income of the property. It is governed by the Unit Trusts Act 1970. These trusts are regulated entities under POCA 2007, by the Financial Services Commission and ownership and identity information on the units of trusts is required to be kept by such trusts.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 41

Identity information of settlor(s) and beneficiaries of trusts in practice


130. According to the Public Record Office, there is no physical count of the number of trust deeds filed with the Office as the records are not electronically abstracted or indexed. The Record Office could not advise on the number of trust deeds that are still valid when the onsite visit was conducted. However, they have indicated that trust deeds that are registered are recorded and categorised by the Records Office by the year of the deed and the parties thereto and it is possible for the staff of the Records Office to carry out manual searches of its records upon receiving a request and for a nominal fee payable by the requestor. 131. For registrations under the Registration of Business Names Act, the COJ confirmed that no trusts were registered under the Registration of Business Names Act as at 31December 2012. 132. For tax purposes, a TRN must be obtained by all trusts that need to transact or interact with the TAJ and any other governmental agencies. With regard to the registration for TRN by trusts, it was revealed that TRNs have been issued to a total of 1174 trusts as at 3September 2012. The TAJ has highlighted that since May 2004, it is compulsory for a trustee or any other representative of the trust to submit its trust deeds (which would contain information identifying the settlor(s) and the named beneficiaries or a class of beneficiaries) to the TAJ for purposes of obtaining the TRN. However, as this is a new obligation, the TAJ advised that as at 1May 2013, they have only obtained approximately 145 copies of the trust deeds. Out of these 145 trust deeds, approximately 80% of them are in relation to testamentary trusts. With regard to the tax filing obligations for trusts 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). The non-compliance rate for the filing of the tax return is approximately 52%, 61% and 73% in the year 2010, 2011 and 2012. 133. Based on the above observation, it is recommended that Jamaica should put in place proper and robust mechanisms to ensure that information identifying the settlor(s) and beneficiaries of a trust that is still valid is fully available and retrievable in a timely manner by the relevant authorities. 134. The EOI Unit has confirmed that they have not received any EOI requests pertaining to identity information of settlor(s) or beneficiaries of trusts during the period of review (i.e.1July 2009 to 30June 2012).

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

42 Compliance with the Standards: Availability of Information

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).

Enforcement provisions to ensure availability of information (ToRA.1.6)


137. Companies including its officers are subject to fines under the Companies Act for failure to maintain documentation required by the Act. For the defaults relating to register of members, the company and every officer of the company who is in default is liable to a fine up to JMD 50000 (approximately USD510) (s. 109(4) of the CA). Every company is obliged to deliver annual return to the registrar of companies and default to deliver the return as required leads to a penalty of JMD 100 (approximately USD1) for each day of default continues, but maximum penalty is limited to JMD 10000 (approximately USD100) (s.121 of the CA). 138. Penalties for non-registration under the Revenue Administration Act may be levied on taxpayers, who without reasonable cause or lawful excuse neglects or fail to apply for registration or neglects or fail to furnish the information required for registration. The person is liable on summary conviction before a Resident Magistrate to a fine not exceeding JMD 1000 (approximately USD10) in the case of an individual or JMD 5000 (approximately USD51) in the case of any other person and in default of payment of such fine to imprisonment for a term not exceeding 30days (s.17D(8) of the RAA). The fine under s.17D(8) of the RAA has been revised to JMD 10000 (approximately USD100) and JMD 50000 (approximately USD510) by an Amendment Bill passed by the Jamaican Parliament on 28June 2013 (the Amendment Bill came into force on 15July 2013). 139. A wilful failure to deliver a true and correct return of the income and comply with the other provisions of s.67 of the ITA makes the person guilty of an offence (s.67(8) of the RAA) Any person who refuses fails or neglects to deliver any return of the partnership shall be guilty of an offence (s.69(3) of the RAA).

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 43

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.

Enforcement provisions in practice


143. With regard to the obligations to file annual return under the Companies Act and the Registration of Business Names Act administered by COJ, enforcement actions have been taken by COJ to deal with non-compliance. 144. Companies must file annual returns with the COJ pursuant to s.121 of the Companies Act. The annual returns contain information concerning past and current shareholders of companies. Financial penalties under s.121(3) of the Companies Act have been imposed on a small number of companies that failed to file the annual returns. Companies are required to pay a penalty of JMD 100 (approximately USD1) per day the return is outstanding up to a maximum of JMD 10000 (approximately USD100). The penalty is included in the fee for each Annual Return. The returns submitted by the companies will not be accepted for registration unless the outstanding fees and penalties are paid.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

44 Compliance with the Standards: Availability of Information


145. Further enforcement actions pursuant to s. 353 of the Companies Act have also been instituted against a small number of companies and their directors who fail to file these annual returns. Under these further enforcement actions, the delinquent companies and their directors will be subpoenaed by the Supreme Court and an order will be issued to compel the companies and their directors to file the annual return. 146. The number of companies that have not complied with the filing of the annual return, the number of cases where penalties were applied and the number of law suits instituted are summarised in the table below.
No. of companies where penalties have been No. of lawsuits instituted applied for late and non- against company for submission of annual non-submission of return annual return 1912 5699 5224 400 242 305

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 45

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

46 Compliance with the Standards: Availability of Information


Phase1 determination The element is in place, but certain aspects of the legal implementation of the element need improvement. Factors underlying recommendations 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. Companies incorporated outside of Jamaica but having their central management and control in Jamaica are not required to provide information identifying their owners as a part of registration requirements and foreign companies are not required to compulsorily keep a share register in Jamaica. Therefore, the information that identifies the owners of foreign companies is not available. Partially Compliant Factors underlying recommendations 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 noncompliance. 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. Recommendations 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 identity information of all relevant entities and arrangements. Recommendations Jamaica should take necessary measures to ensure that robust mechanisms are in place to identify the owners of these share warrants to bearer. As Jamaica asserts a sufficient nexus for taxing jurisdiction on a management and control basis, it should require submission of information on its owners when foreign companies register or when they apply for their tax file number and Jamaica should take necessary steps to require foreign companies to keep register of Jamaican shareholders in Jamaica

Phase2 rating

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 47

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.

A.2. Accounting records


Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements.

General requirements (ToRA.2.1)


151. The Companies Act (s. 144) requires every company to keep proper books and documents of account to give a true and fair view of the state of the companys affairs and to explain its transactions. These books and documents of account are with respect to all sums of money received and expended by the company, matters in respect of which the receipt and expenditure takes place, all sales and purchase of goods by the company and the assets and liabilities of the company. The books and documents of account are required to be at all times open to inspection by the directors. The failure of a director to take all reasonable steps to secure compliance by the company resulting in a default by the company makes such director liable on summary conviction before a Resident Magistrate to imprisonment with or without hard labour for a term not exceeding six months or to a fine not exceeding fifty thousand dollars. However, the Minister may, according to the nature and volume of the business carried out by the company in Jamaica, issue an order grant that exempts the company from keeping proper books and documents of account (s.144(4) of the CA). No exemption from the obligation to keep proper books and documents of account has ever been granted by the Minister as at 31December 2012.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

48 Compliance with the Standards: Availability of Information


152. Section144 of the Companies Act refers to the maintenance of books of accounts by the company, as are necessary to exhibit and explain the transactions and financial position of the trade or business of the company including books containing entries from day to day in sufficient details of all cash received and cash paid and goods sold and purchased showing the goods and the buyers and sellers in sufficient detail to enable these goods and their buyers and sellers to be identified. 153. The profit and loss account and balance sheet of the company is required to be presented before the company at the annual general meeting by the directors of the company (s.145 of the CA). Furthermore, if the company is registered on the Jamaica Stock Exchange, its balance sheet must be published at the end of each financial year. The director of the company is liable for the penalties as in the case of the offence of not maintaining the proper accounts and not complying with the provisions presenting the profit and loss account and balance sheet before the company in the general meeting. 154. All public companies are required to file accounts annually to the Registrar of Companies. This requirement also applies to private companies wherein a body corporate is shareholder. These accounts are in the form of the balance sheet and profit and loss account including all the documents required by law to be annexed thereto and a copy of a report of the auditor (s.124 of the CA). 155. Section18 of the Banking Act 1992 requires every local bank and foreign bank to submit an audited balance sheet and profit and loss account in respect of all businesses transacted by the bank in the financial year and auditors report to the Bank of Jamaica. The accounts are required to be prepared in accordance with the generally accepted accounting principles as set out in the Handbook of the Institute of Chartered Accountants of Jamaica. The bank is also subject to the statutory publication requirements. 156. A company incorporated outside the Island and carrying on business within the Island is required to prepare a balance sheet and profit and loss account containing the particulars and documents, similar to, as are required by a company incorporated in the island and it is also required to deliver a copy of these documents to the Registrar of companies for registration (s.366 of the CA). 157. Section89 of the ITA also requires every person to keep proper books of accounts sufficient to record all transactions necessary to ascertain the gains and profits made or the loss incurred. Domestic and foreign companies carrying on business in Jamaica are required to keep their accounting records in Jamaica and required at all times to have these open to inspection by the directors. Exemption from keeping the records in Jamaica can be authorised by an order of the Minister (s.144(4) of the CA).

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 49

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

50 Compliance with the Standards: Availability of Information


hard labour, for a term not exceeding five years. These provisions would oblige the taxpayer to keep and maintain account books to justify the income disclosed in the return of income. Further, any person who aids, abets, assists, counsels any other person to keep and prepare any false accounts concerning any profits and gains chargeable under the ITA is liable on summary conviction before a Resident Magistrate to a fine not exceeding JMD 100000 (approximately USD1020) or to imprisonment with or without hard labour for a term not exceeding two years. During the period of review, Jamaica has not applied the sanctions provided under s.99 of the Income Tax Act.

Underlying documentation (ToRA.2.2)


163. The Companies Act does not specifically provide for the maintaining of underlying documents. The only reference to the underlying records is found in s.157 of the Companies Act which requires that the auditor shall have access to the books and accounts and vouchers of the company. 164. Neither the Partnership Act nor the Trustee Act includes any requirements to keep accounting records or underlying records. However, s. 89(2) of the ITA provides that, a person shall be deemed not to have kept proper books of account if he has not kept such books or accounts as are necessary to exhibit or explain his transactions and financial position in his trade or business, including a book or books containing entries from day to day in sufficient details of all cash received and cash paid, and, where the trade or business has involved dealings in goods, statements of annual stocktakings, and accounts of all goods sold and purchased. This provision imposes the requirement of maintaining accounts to substantiate the transactions but does not clearly refer to include the underlying documentation. This ambiguity was dealt with by Jamaica through the amendments made to the RAA passed by the Jamaican Parliament on 28June 2013 (the amendments came into force on 15July). The amended s.17LA(1) of the RAA supplements the obligations under s. 89 of the ITA by requiring Every person in lawful possession of any book, record or other document that is relevant to the tax liability of any person shall keep that book, record or document for a period of not less than seven years.16 This effectively means that every person including, companies,
16. 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 introduced examples of the type of underlying documents that the persons are required to keep. The amendment 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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 51

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).

5-year retention standard (ToRA.2.3)


165. Neither the Companies Act nor the Partnership (Limited) Act nor the Trustee Act prescribes a time period for the retention of documents. 166. For the retention of records in case of dissolution of companies, s.330(3) of the Companies Act states that the Court may decide on the period of time in which the books and papers of the company cannot be destroyed (in any case not exceeding five years from the dissolution of the company). However, Jamaica has not reported making of any rules in this regard and has responded that currently there are no such rules. In practice, according to the information provided by Jamaica, documents are held at least 20years pursuant to s.338(1)(b) of the Companies Act. Jamaica has further stated that review is currently underway aiming at adoption of proper retention of information/documents policy. 167. Jamaica has asserted that Accounting records are required to be kept for six years in keeping with the limitation period set out in the Limitation of Actions Act. 168. Section51 of the Limitation of Actions Act 1881 deals with the limitations of actions for merchants accounts with respect to the trade of merchandise between merchants to a period of six years after the cause of such actions. This provision merely deals with the limitations with regard to making merchants claim and it would be in the interest for concerned merchants to maintain related documentation for a period of six years to substantiate the claims. But, this is not a requirement under the law and if a merchant does not maintain the records it might lose the claims. 169. In addition, s.21(3) of the Tax Collection Act 1867 provides a limitation of seven years for the collection of taxes from a person. This means that the TAJ may conduct audits of taxpayers within seven years of the date at which collection of taxes was due. Therefore, it is in the interests of Jamaican taxpayers to maintain related documentation for a period of seven years. But the fact remains that there is no legal requirement to retain accounting records by the persons.
(a) keep every such document, in order to facilitate ascertainment by a Commissioner of the tax liability of any person.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

52 Compliance with the Standards: Availability of Information


170. Where the company is dissolved, the information held by the government entities is kept for the required period and then stored at the government archives for up to 20years pursuant to the Financial Administration and Audit Act 1959. 171. The Bank of Jamaica, as per s.34A of the Bank of Jamaica Act 1960, has power of supervision and periodical examination of all commercial banks and financial institutions. The regulated entities under the supervision and control of the BOJ and Financial Services Commission are required to maintain the record of their customer transactions for at least five years in view of the anti-money laundering provisions. 172. A Bill amending the Revenue Administration Act to introduce an obligation for all relevant entities and arrangements in Jamaica to maintain all accounting records and documents for a period not less than 7years was passed by the Jamaican Parliament on 28June 2013 (the Amendment Bill came into force on 15July 2013). The new s. 17LA(1) of the RAA as introduced by the Amendment Bill provides that Every person in lawful possession of any book, record or other document that is relevant to the tax liability of any person shall keep that book, record or document for a period of not less than seven years.17 Similarly, failure to comply with the obligation under the new s. 17LA(1) of 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.

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..

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 53

Availability of accounting information in practice Companies Office of Jamaica


173. According to the COJ, the procedure for enforcing the filing of accounts is the same as that for the Annual Returns as the accounts are submitted as part of the Annual Returns under s.121 of the Companies Act (see details in section A.1.6). Enforcement actions are taken against some companies and directors who fail to file these annual returns including the accounts but these actions does not seem to be adequate or effective in ensuring the compliance with the filing and reporting obligations (also see details in section A.1.6). The delinquent companies and its directors may be subpoenaed by the Supreme Court and an order will be issued to compel the companies and its directors to file the required accounts. Where a company and its director fail to comply with the order of the court, Contempt of Court proceedings are initiated against the director and the director may be imprisoned. The COJ has advised that there are around 10 cases each year where Contempt of Court proceedings are initiated against the company directors.

Tax Administration of Jamaica


174. With regard to the obligations to maintain accounting records under the s.89 of the Income Tax Act, TAJ advised that such obligations are usually enforced through the tax assessment procedure as the taxpayer would have to justify the income and deductions in their tax returns. However, no statistics are available with regard the number of cases where accounting records have not been kept by the taxpayer. In addition, no penalties on the failure to maintain accounting records have been applied to date. The TAJ explained that this is mainly because the penalties can only be applied by the courts and they perceived that the prescribed monetary penalties are too low to achieve any deterrence effect. Further, the cost and effort involved in preparing the case for Court hearing far exceeds the monetary penalties that is imposed on the defaulters. 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 to ensure that it provide for effective deterrence against non-compliance of the account keeping obligations. 175. The EOI Unit within the TAJ has confirmed that they have received 2 EOI requests pertaining to accounting information during the period of review (i.e.1July 2009 to 30June 2012) and the requested information was provided. 176. The TAJ has advised that they have not received any EOI requests for underlying documents of relevant entities during the period of review.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

54 Compliance with the Standards: Availability of Information


The TAJ has highlighted that there have been no instances where the TAJ was unable to respond to an EOI request because of the lack of a compulsory retention period. Notwithstanding this, it is noted that Jamaica only received two requests for accounting information during the period of review and the practical impact of the deficiencies identified in the Phase1 review could not be sufficiently ascertained by the two requests.
Determination and factors underlying recommendations
Phase1 determination The element is in place. Phase2 rating Largely Compliant Factors underlying recommendations 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 noncompliance. 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. Recommendations 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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 55

A.3. Banking information


Banking information should be available for all account-holders.

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

56 Compliance with the Standards: Availability of Information


the banks, the banks are also required to maintain transaction records relating to walk-in customers.

Record-keeping requirements (ToRA.3.1)


184. The supervisory authorities under the POCA are Bank of Jamaica and Financial Services Commission. POCA is applicable to financial institutions and designated non-financial institution (as designated by the Minister), including: a bank licensed under the Banking Act; a financial institution licensed under the Financial Institutions Act; a building society registered under the Building Societies Act; a society registered under the Co-operative Societies Act; a person who (i) engages in insurance business within the meaning of the Insurance Act; (ii) performs services as an insurance intermediary within the meaning of the Insurance Act, but does not include an insurance consultant or an adjuster; a person licensed under the Bank of Jamaica Act to operate an exchange bureau; a person licensed under the Securities Act as a dealer or investment adviser; approved money transfer and remittance agents and agencies as defined by s.2 of the Bank of Jamaica Act; any other person declared by the Minister responsible for national security, by order subject to affirmative resolution, to be a financial institution for the purposes of the POCA.

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 57

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.

Enforcement of obligation to keep banking information in practice


191. As at 31December 2012, there were thirteen licensed deposit taking institutions (DTIs) comprising seven commercial banks licensed under the Banking Act, two licensees under the Financial Institutions Act (FIA) and four building societies licensed under the Building Societies Act. The Minister of Finance has the authority to issue and revoke licenses under these
19. www.cfatf-gafic.org/downloadables/Jamaica_1st_Follow-Up_Report_(Final)_ English.pdf.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

58 Compliance with the Standards: Availability of Information


Acts and the Bank of Jamaica is statutorily mandated to carry out supervisory oversight of DTIs. In addition to the above entities, there are also the credit unions. Credit unions are financial cooperative societies which carry out deposit taking activities (with their members), however they are not currently subject to the Bank of Jamaicas supervisory oversight regime. As at 31December 2012, there were 43 credit unions in Jamaica. 192. Credit unions are governed by the Cooperative Societies Act and fall under the regulatory ambit of the Registrar of Friendly and Cooperative Societies. Most credit unions are also members of the Jamaica Cooperative Credit Union League (JCCUL) which provides some financial services, and undertakes some self-regulatory oversight activities in relation to its member credit unions. The Ministry of Industry, Investment and Commerce has overall responsibility for the legislative framework which governs cooperative societies including credit unions. In 1999, the Minister of Finance designated credit unions as specified financial institutions under the Bank of Jamaica Act, which designation allows the BOJ to obtain prudential information from the credit union sector which generally complies through the submission of prudential returns and submitting to on-site reviews by the Bank of Jamaica. 193. The Bank of Jamaica Act mandates BOJ as the supervisory authority to undertake periodic examination of deposit taking licensees. The examination process involves both off-site and on-site examination of supervised entities. BOJ is also the named Competent Authority under the Proceeds of Crime Act (POCA), mandated with oversight of deposit takers to ensure their compliance with POCA and its Regulations as well as with the Guidance Notes issued by the Bank to the industry on AML/CFT issues. The BOJs examination programme is designed to assess the level of compliance with applicable prudential laws, regulations, and guidelines and to ascertain that appropriate governance structures are put in place to allow for the effective management and oversight of the AML/CFT process. In this regard, the on-site examination process incorporates various tests of a licensees systems to ascertain inter alia: the effectiveness of its Customer Due Diligence (CDD) program including adherence to account opening standards as it relates to Know Your Customer (KYC) information and other CDD measures; that systems to identify and monitor high risks accounts on an ongoing basis are in place and are appropriate and effective; that systems to identify and report threshold and suspicious transactions are in place and that reporting to the Designated Authority is timely and relevant; that systems to identify unusual transactions are effective and that such transactions are routinely documented and stored to facilitate timely retrieval for investigative purposes.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Availability of Information 59

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

60 Compliance with the Standards: Availability of Information


(i.e.1July 2009 to 30June 2012) and the requested information was provided according to Jamaicas EOI partners.
Determination and factors underlying recommendations
Phase1 determination The element is in place. Phase2 rating Compliant

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 61

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

62 Compliance with the Standards: Access to Information


199. Phase1 review had also determined that the tax authorities are required to request the information from the taxpayer prior to seeking a production order from the court to obtain the information from a third party. The taxpayer rights are duly protected through the judicial proceedings though the laws specifically do not lay down clear rules corresponding to the standards, providing for the safeguards to the taxpayer and third parties. 200. A Bill amending the RAA to remove the domestic tax interest requirement and also to remove the requirement of notifying the taxpayer prior to seeking a production order from the court was approved by the Jamaican Parliament on 28June (the Amendment Bill came into force on 15July 2013) after the review period and the onsite visit.

B.1. Competent Authoritys ability to obtain and provide information


Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information).

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 63

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).

Information from government authorities


207. The Commissioner of Inland Revenue can seek information from any public officer for the purposes of the Income Tax Act (s.70(5) of the ITA20). It is the duty of the public officer to furnish information which may be in his possession or which he may be able to procure. 208. The Postal Corporation of Jamaica carries out certain types of services as an agent. These include bill payments, sale of lottery tickets and
20. Section70(5) of the ITA was repealed by an Amendment Bill passed by the Jamaican Parliament on 28July 2013. A new section70A providing the same access powers was introduced by the same Amendment Bill.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

64 Compliance with the Standards: Access to Information


acting as collection agent for a micro-lending agency (a subsidiary of a supervised deposit taking entity). Information relating to these transactions would be available through the principal operators who are incorporated under the Companies law and who are subject to income taxes. In the case of the micro-loans operations, these would also be subject to the jurisdiction of the Supervisor of Banks (under consolidated supervision powers). 209. The Postal Corporation has indicated its intention to offer remittance services. To do so would require licensing under the Bank of Jamaica Act. If this occurs, the Postal Corporation would be subject to supervision by the Bank of Jamaica and also be subject to AML/CFT statutory obligations. 210. Under the Income Tax Act, information relating to postal revenue is not available directly to the Commissioner of Inland Revenue. However, postal workers are deemed to by the Postal Act to be customs officers for the purpose of receipt of postal articles. All information regarding articles imported through the post office and the customs duties payable would be available to the Commissioner of Customs.

Powers under the Income Tax Act


211. Section70 of the ITA empowers the Commissioner of Inland Revenue to issue a notice on any person, whether he is or not liable to pay income tax, to require such person to deliver the return of income, require their attendance and to give evidence with respect to his income and to provide copies of accounts including balance sheets relating to trade, profession or vocation and audit report, if any, and make inspection of books, accounts and documents containing information about the transactions. Under these provisions, the Commissioners powers can only be exercised when conducting enquiries with regard to income of the taxpayer, whether he is liable to pay tax or not. 212. For the purpose of the assessment of a taxpayer who has been issued the assessment notice and has disputed the assessment and the Commissioner has received the notice of objection, the Commissioner under s.75(5) of the ITA may by notice summon any person to give evidence respecting the objected assessment to attend before him and may examine such person under oath or otherwise. 213. The Commissioner also has powers under s. 91 of the ITA in connection with the filed tax return or for making the assessment. Under this section the Commissioner has same powers as available to him under s.75(5) of the ITA discussed above. These powers are available to the Commissioner for the following purposes: to verify the correctness of any return, statement, declaration, or particulars delivered under the ITA;

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 65

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.

Powers under the Revenue Administration Act (RAA)


216. Information may also be obtained by the Commissioner on the basis of the powers under the Revenue Administration Act. The procedure to obtain information from third parties such as banks and other financial institutions is provided for under s.17G of the RAA. However, the law provides that the information first has to be requested from the taxpayer. Where the taxpayer does not co-operate, the Commissioner may apply to a Judge in Chambers for a production order to compel the third party to produce the requested information. Such an order can be requested in relation to the person suspected of having possession or control of the information, document or record which is relevant to the duties of the Commissioner in relation 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 outstanding tax due. Such an order can be used to obtain information from: a bank licensed under the Banking Act; a financial institution licensed under the Financial Institutions Act; a person licensed under the Public Accountancy Act; a building society registered under the Building Societies Act; a society registered under the Cooperative Societies Act or the industrial and provident Societies Act; a person who is or has been a party to any business transaction with the taxpayer in question.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

66 Compliance with the Standards: Access to Information


217. A Judge in chambers may issue a production order after satisfaction that the Commissioner has requested the information, document or record from the taxpayer without success and in all the circumstances of the case, there are reasonable grounds for making the order. The production order overrides the secrecy obligations imposed on the person relating to disclosure of information under any other acts. 218. The RAA defines the taxpayer 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 to be payable. In the RAA the revenue department means, the Customs Department, the Inland Revenue Department, the Land Valuation Department, the Revenue Protection Department, the Tax Administration Services Department, the Tax Payer Appeals Department and the Taxpayer Audit and Assessment Department. The scope of responsibilities of Commissioners working in these departments is also prescribed in the RAA. 219. For the purpose of enforcement of tax collection, the Commissioner has powers to make enquiries, inspect documents and search premises. Section17I of the RAA provides that the Commissioner or authorised person for the purpose of exercising any power under a relevant law may enter during office hours the business premises of a taxpayer for carrying out the audit or examination of any accounts, books, records or any other documents relating to that business or inspect any property or goods described in the inventory. The person responsible for the operation of the business is required to permit the Commissioner or authorised person to make copies of or take extracts from the documents or record. Therefore, these powers can be used in case of a taxpayer only. 220. Section17J of the RAA provides for the issue of a search warrant by the Judge of the Revenue Court authorising the Commissioner or authorised person named in the warrant to enter and search the specified premises. The search warrant can be issued by the judge on being satisfied on the basis of information under oath by a Commissioner indicating the necessity for search on the grounds indicated in the section. The warrant empowers the authorised person to make copies of books/documents and also detain and remove the documents for the purpose of making the copies, but the period of detention does not exceed seven days. The authorised person can take inventory of any money, jewellery, bullion, stocks or other valuables found at the premises. The reasonable grounds for forming the satisfaction are: fraud has been committed by a taxpayer and evidence of such fraud is to be found on the premises specified in the information; or a taxpayer has failed to comply with any requirement of a relevant law relating to the furnishing of information or the production of

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 67

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

68 Compliance with the Standards: Access to Information


(2) An application under subsection(1) shall be made ex parte and shall be in writing and be accompanied by an affidavit. (3) The person referred to in subsection(1) is a (a) bank licensed under the Banking Act; (b) a financial institution licensed under the Financial Institutions Act; (c) a person registered under the Public Accountancy Act; (d) a building society registered under the Building Societies Act; (e) a society registered under the Cooperative Societies Act or the Industrial and Provident Societies Act, as the case may be; (4) Subject to subsection (4A), where an application is made for an order in relation to any person, the Judge in Chambers, if satisfied that the Commissioner concerned has requested the information, document or record from the taxpayer without success and that in all the circumstances of the case, there are reasonable grounds for making the order, may make an order requiring the person to (a) produce to the Commissioner or an authorised person named in the order, any information, document or record of the kind referred to in subsection(1) that is in the persons possession or control; or (b) make any such document or record available to the Commissioner or that authorised person, as the case may be, for inspection. (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 (b) where the information relates to an international tax agreement. (5) A person referred to in subsection(3) (c) shall only be required to furnish information, documents or records which form part of a taxpayers accounting records.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 69

(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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

70 Compliance with the Standards: Access to Information


(3) The Commissioner General may (a) by not less than fourteen days notice in writing, require any person to attend before him and give evidence with respect to that person or any other person in respect of the administration or enforcement of any relevant law; and (b) examine the person on the evidence, on oath or otherwise. (4) A person who fails to comply with a requirement under (a) subsection(1), whether the non-compliance involves i. the furnishing of information or the production of documents that is incomplete, incorrect or done after the time required; or ii. other failure; (b) subsection(3), commits an offence and is liable to the penalty specified in subsection(5). (5) The specified penalty is (a) on summary conviction in a Resident Magistrates Court i. for a first offence, a fine not exceeding two million dollars or imprisonment for a term not exceeding one year or both such fine and imprisonment; or ii. for a second or subsequent offence, a fine not exceeding five million dollars or imprisonment for a term not exceeding five years or both such fine and imprisonment; or (b) on conviction on indictment in a Circuit Court, a fine or imprisonment for a term not exceeding ten years or both such fine and imprisonment. 223. The amended s.17G of the RAA provides for specific access power to obtain information held by certain specified persons21 listed in s. 17G(3) of the RAA by allowing the Commissioner General to apply to the Court
21. The persons are: (a) a bank licensed under the Banking Act, (b) a financial institution licensed under the Financial Institutions Act; (c) a person registered under the Public Accountancy Act; (d) a building society registered under the Building Societies Act; (e) a society registered under the Cooperative Societies Act or the Industrial and Provident Societies Act, as the case may be.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 71

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..

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

72 Compliance with the Standards: Access to Information


(b) where the information relates to an international tax agreement. 227. The new s. 17IA of the RAA provides the Commissioner General with direct access powers to request information from any person in Jamaica (other than persons covered by s. 17G(3) of the RAA) whether or not that person is liable to pay any particular tax or is the subject of any audit or other tax related action in Jamaica. Once a notice under s.17IA of the RAA is issued by the Commissioner General to the person, the person is required to provide the requested information within 30days from the date of the service of the notice. The Commissioner General may also issue a notice to any person to require the person to attend before him and give evidence with respect of that person or any other person in respect of the administration or enforcement of any relevant law. 228. The amendments made to the RAA were passed by the Jamaican Parliament after the review period and the onsite visit and are applicable to all EOI agreements entered into by Jamaica. Hence, the analysis of the EOI practices during the period of review is based on the provisions of the old RAA.

Powers under other acts


229. The tax authorities have powers to request information from public officers. The information might be available with them or they should be able to procure it from the persons with whom the same is available. 230. Under the Companies Act, the Registrar (public officer as per s.351 of the Companies Act) or other government authorities do not have powers to obtain information from the company, except the powers of inspection provided in sections 160 to 171 of the Companies Act. The Minister can authorise inspections on the basis of grounds stated in the relevant sections. These inspections are of two types: i) investigation of a companys affairs and of related companies, and ii) investigations into the ownership of the companies. Section352(2) of the Companies Act requires that a process for compelling the production of any document kept by the Registrar can only occur under a court order.

Banking, ownership and identity information (ToRB.1.1)


231. Information is required to be held by banks and financial institutions about their customers (see earlier analysis of the AML laws, regulations and guidance note). The information about the identity and ownership of building society registered under the Building Societies Act and a society registered under the Cooperative Societies Act or the Industrial and Provident Societies

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 73

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

74 Compliance with the Standards: Access to Information


235. Jamaica requires that the requesting state, when seeking bank information, should normally submit a request letter setting out the nature and purpose of the request, the name of the taxpayer and any relevant records on the taxpayer. The Jamaican tax authorities would then request information from the bank in accordance with domestic law. 236. The tax authorities can obtain bank information with respect to persons under examination in Jamaica only and cannot thus request the bank information if the person is not already under tax examination in Jamaica, who is the subject of the EOI request. The assessment team is, therefore, of the view that though the tax treaty with Spain provides that the Minister has power to obtain bank information, the requisite information cannot be obtained if the person concerning whom request is made is not a taxpayer in Jamaica. 237. Information concerning the members of companies and their holdings is available in the register of members maintained by the company. These documents are available for inspection during office hours to the members and to the public after payment of a fee. The tax authorities do not have any powers to obtain information about the identity and ownership of the company directly from the company, if such a request is not in relation with the assessment of taxpayer (s.75(5) of the ITA). The tax authorities can obtain the information about members by inspecting the register of members as per the procedure outlined in s.112 of the Companies Act by paying the inspection fee. 238. The judicial procedure prescribed in s. 17G of the RAA will only be available if the requested information is in relation with: establishing an assessment with respect to a taxpayer under any relevant law, 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. 239. The information about the identity of the owners that hold share warrants cannot be obtained as it is neither available with the company or the regulatory authorities. 240. Partnerships and trusts are required to file information about the identity and holding of each partner or beneficiary as the case may be to the tax authorities in the form of a tax return (Form IT-03). The tax authorities would be in a position to provide the information available in the tax returns in response to EOI request. If the partnerships/trusts have not delivered their tax returns to the tax authorities then tax authorities would be required to initiate proceedings specified in s.70 of the ITA against defaulting partnerships/ trusts. As noted previously, the tax authorities cannot obtain information

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 75

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).

Accounting records (ToRB.1.2)


244. Accounting records are maintained by various entities as required by the legislation regulating those persons and/or required by the Income Tax Act. Accounting records are not required to be filed with the government authorities regulating them, except the profit and loss account and balance sheet in case of companies. The accounting records cannot be requested for inspection and copies cannot be obtained by the tax authorities from the person directly maintaining these records unless there is a request made by the Commissioner to a person to provide a tax return (s.70 of the ITA). 245. If a foreign tax authority requests information about business of its taxpayer with a natural or legal person operating in Jamaica, which in turn require information from a third person in Jamaica, the tax authorities would be required to follow the judicial procedure of s.17G of the RAA as discussed previously.

23.

www.jrs.gov.jm/home_template.php?page=forms&ye=1&desc=Income+Tax.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

76 Compliance with the Standards: Access to Information

Use of information gathering measures absent domestic tax interest (ToRB.1.3)


246. The tax authorities have information gathering powers for use when taxpayers are under examination. As mentioned previously, under the RAA information cannot be obtained from the taxpayer or third parties in absence of tax proceedings initiated by Jamaica during the review period. The powers under the ITA are less restrictive and allow for requests of information to taxpayers. Section83 of the ITA provides for the arrangements with the government of territory outside Jamaica with regard to relief from double taxation. But, due to domestic tax interest requirements it may not be possible to provide the requested information. 247. The power to obtain information is very limited because tax authority can only obtain information if the taxpayer is currently under examination during the review period. A jurisdiction should have no restrictions on information exchange caused by the domestic tax interest requirement. The TOR (B.1.3) provides that competent authorities should use all relevant information-gathering measures to obtain the information requested, notwithstanding that the requested jurisdiction may not need the information for its own tax purposes (e.g.information should be obtained whether or not it relates to a taxpayer that is currently under examination by the requested jurisdiction). 248. A Bill to remove address the deficiencies in relation to access powers of the authorities was passed by the Jamaican Parliament on 28June 2013 (see analysis in earlier paragraphs).

Compulsory powers (ToRB.1.4)


249. As discussed above the powers to obtain information are limited to information held by the taxpayer if he is under examination or information already held by government authorities. 250. Under the EOI arrangements, the Contracting State is not obliged to provide information not obtainable under the domestic laws or in the normal course of the administration of that or other Contracting State. The powers of inspection, search and seizure of documents, though available in Jamaican law, are subject to certain requirements as provided above, it may therefore be that if these requirements are not met, Jamaica can refuse to resort to such methods for responding to information requests from the tax authorities of other countries. 251. The assessment team is of the belief that clear laws or regulations should be adopted that allow for the Jamaican tax authorities to have the necessary powers to issue a notice to any person residing in the territorial jurisdiction of Jamaica, who is suspected to have information in his

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 77

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).

Access to ownership, identity, accounting and banking information in practice


253. Before the EOI Unit was established in March 2012, there were no established procedures or designated office to gather information for EOI purposes. As the volume of requests was relatively low, the incoming EOI requests were handled on a case-by-case basis. These requests generally relate to contact information of taxpayers and the Jamaica authorities were generally able to obtain the information directly from its the tax records and databases. During the period of review, there was one case where a tax audit is required to gather and collect the requested information from taxpayers. The TAJ did not encounter any difficulties collecting information via tax audits during the period of review. 254. In March 2012, the EOI Unit was formally established within the Large Taxpayer Office of the TAJ. The new EOI Unit is responsible for handling both incoming and outgoing EOI requests. 255. Jamaicas EOI partners have indicated that they have requested identity and ownership, accounting and banking information from Jamaica during the period of review. The number of requests pertaining to identity and ownership, accounting and banking information handled by the EOI unit is summarised in the next paragraph. Jamaica also received other types of EOI requests (a total of 28 EOI requests). Such other requests generally pertain to general information such as contact details of individual taxpayers and other

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

78 Compliance with the Standards: Access to Information


general information such as information concerning estates and businesses in Jamaica. 256. Of the 28requests received during the review period, two requests pertained to identity and ownership information, two requests pertained to accounting information and three requests pertained to banking information. These seven requests were all answered by Jamaica. The remaining 21requests (which were also answered by Jamaica) related to more general information such as residence or identity information of individuals. The information gathering procedures used by the EOI Unit varies depending on where the information resides. The requested information may reside in the databases and physical files maintained by TAJ, databases or files of other government authorities, banks or other financial institutions, or with any third party holder of information. The EOI Unit initiates the appropriate procedure to gather the requested information once they are satisfied that the EOI request meets the requirements of the relevant EOI agreement. 257. The EOI Unit first checks the availability of the requested information in its internal databases and files of the TAJ. These databases maintained by TAJ and the information available in the databases are as follows: ICTAS (Integrated Computerized Tax Automated System) shows the entire contents of each tax return submitted and provides information on filing and payment of all tax types including interest, penalty and surcharge. TRN (Taxpayer Registration Number) - Individuals Contains biological data such as name, address, telephone number, date of birth, place and parish of birth, mothers name, nationality, country of birth, occupation and other supporting identification information of all registered individuals. Business Entities Contains name, address, type of entity (company, partnership etc.), nature of business activities, directors/responsible officers, start date etc. of all registered business entities.

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 79

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

80 Compliance with the Standards: Access to Information


lead to a criminal investigation. Once a request was made by the EOI Unit to the Investigation Unit, the investigator will work to gather the required information from various sources and this may include conducting search and seizure. Before conducting the search and seizure exercise, TAJ has to apply ex-parte to the Revenue Court for a search warrant. A total of 2 search warrants were requested and granted by the Revenue Court during the year 2011 to 2012. TAJ advised that the entire process of preparing the affidavit to obtain the search warrant would usually take 1week. Jamaica advised that they had conducted tax investigation and intelligence in one case (out of 28 EOI requests) to obtain the information required under the EOI request. 260. The old s.17G of the RAA provided for the procedure to obtain information from third parties including banks. Under s.17G of the RAA, the TAJ has to make an ex-parte application to the Revenue Court for a production order to obtain information from person specified in s. 17G(3) of the RAA (i.e.banks, financial institutions etc.). As elaborated in the earlier paragraphs, during the period of review, there was a requirement for the TAJ to obtain the required information directly from the taxpayer first before they may apply to the Revenue Court for the production order. In addition, the information sought must also have been needed for Jamaicas domestic tax purposes. In this regard, there was an obligation on TAJ to furnish evidence to the Court to prove that the taxpayer failed to provide the requested information within a reasonable timeframe and the reasons why the information is needed. Due to the procedural difficulties, the TAJ did not request a production order from the Revenue Court during the period of review (i.e.1July 2009 to 30June 2012). 261. With regard to the procedure for obtaining a production order, TAJ has to make an ex-parte application to the Revenue Court by filing an affidavit (i.e.containing evidence proving that the taxpayer had failed to provide the requested information within a reasonable timeframe and the reasons why the information is needed) signed by the Commissioner General. TAJ advised that based on past experience, the procedure of obtaining a production order usually took a week with the Revenue Court granting the production order in the same day of the hearing (i.e.from the time when the legal counsel starts preparing the affidavit to the point where the production order is granted by the Revenue Court). The same one week timeframe is also applicable for the procedures provided under the amended s.17G of the RAA. If the information is sought from a financial institution, the financial institution is usually given 5 to 7 working days to provide the requested information. 262. Jamaica received 3requests pertaining to banking information during the period of review. In one case, one peer has highlighted that Jamaica had taken more than a year to respond to the EOI request. Upon further clarification

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 81

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.

Secrecy provisions (ToRB.1.5)


264. Section45(1) of the Banking Act contains provisions for protecting the secrecy or confidentiality of the information held by banks. The official or the person, having access to records of the bank or the material with regard to

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

82 Compliance with the Standards: Access to Information


the account of any customer of the bank, are prohibited from giving, divulging or revealing such information. The contravention of the provisions on conviction provides a fine up to JMD 2000000 (approximately USD20400) or to imprisonment for a term up to two years or to both such fine and imprisonment. 265. However, the above stated secrecy rule can be overridden if one or more of the 13 circumstances described in the Fourth Schedule of the Banking Act. These include: the information is disclosed to an authorised officer (Supervisor, Deputy Supervisor or any other person authorised to perform functions on behalf of the Supervisor or the Deputy Supervisor under Bank of Jamaica Act); the disclosure is made on the written direction of the Minister to the police or to a public officer who is duly authorised under the provisions of any law for the time being in force which requires such disclosure for the purpose of the investigation or prosecution of a criminal offence; the Minister in writing directs such disclosure to a foreign government or agency of such government where there exists between Jamaica and such foreign government an agreement for the mutual exchange of information of such kind and the Minister considers it in the public interest that such disclosure be made; the disclosure is required under another enactment; the disclosure is required by virtue of an order of the court, other than an order under paragraph(g). Paragraph(g) provides for the circumstance, where the bank has been served with a court order attaching money in the account of the customer.

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 83

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

84 Compliance with the Standards: Access to Information


with other territories with a view to affording relief from double taxation and s.83(4) provides that when such arrangements have effect, the obligation as to secrecy imposed by s.4 of the ITA shall not prevent the disclosure to any authorised officer of the Government with which arrangements are made, of such information as is required to be disclosed under the arrangement. Due to these specific provisions, the secrecy provisions provided in the domestic law do not prevent the information disclosure to the competent authority of treaty partner. 274. Under various Jamaican statutes secrecy provisions are foreseen and the person dealing with the information in their official capacity have duty to regard and deal with such information as secret and confidential. However, such persons are allowed to communicate the information to: the person to whom he is authorised by the Minister to communicate; for the purpose of the Act.

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 85

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.

Determination and factors underlying recommendations


Phase1 determination The element is in place. Phase2 rating Largely Compliant Factors underlying recommendations While the deficiencies identified in the Phase1 review do not appear to have had any adverse impact on effective EOI in practice, the exercise of access powers has been limited and a dedicated EOI Unit was put in place 4months before the end of the review period. The amendments to the Revenue Administration Act to address the domestic tax interest issue 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. Recommendations Jamaica should continue to implement the recommendations identified in Phase1 review expeditiously and ensure that its procedures are exercised as appropriate by the EOI Unit.

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

86 Compliance with the Standards: Access to Information

B.2. Notification requirements and rights and safeguards


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.

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).

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: Access to Information 87

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.

Not unduly prevent or delay exchange of information (ToRB.2.1)


283. The protocol to the Jamaica Spain tax treaty under the heading possibility of declining a request states that The rights and safeguards secured to persons by the laws or administrative practice of the Contracting State which has been requested to provide the information under this Article shall not be applied in a manner that would unduly prevent or delay effective exchange of information. There is no such explicit provision in Jamaicas other treaties. 284. Jamaican authorities have advised that, generally, the procedure for obtaining a production order from the court for information from third parties as per s. 17G of the RAA is done expeditiously (usually within a week after requesting order). The order generally specifies that the third party produce the information within 30days of receipt of the order (s.17G of the RAA). In practice, the Competent Authority has not obtained any production orders from the court either for EOI or domestic purposes during the period of review. However, they do have experience in obtaining such production orders prior to the period of review and during those instances; the Revenue Court had issued the production orders expeditiously after receiving the application from the Commissioner General. The procedures of obtaining an order from the Revenue Court do not unduly prevent or delay effective exchange of information. 285. Jamaica has agreed that, the law does not provide for the obtaining of information before first requesting it from the taxpayer (before the

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

88 Compliance with the Standards: Access to Information


amendments to the RAA which was passed by the Parliament on 28June 2013). However, in practice, the Taxpayer Audit and Assessment Department, which has an investigative arm, usually investigates not only taxpayers but anyone of interest who may be in breach of the tax laws, without first notifying them.
Determination and factors underlying recommendations
Phase1 determination The element is in place. Phase2 rating Largely Compliant 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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 89

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

90 Compliance with the Standards: EXchanging Information


289. Jamaica has received 28 information requests from two of its tax treaty partners during the three year review period (1July 2009 to 30June 2012) and has been able to respond to the requests within 90days in 25 out of 28 cases. Seven of these 28requests pertain to identity and ownership, accounting and banking information (see breakdown in section B.1) while the remaining requests were general requests relating to contact details of individual taxpayers and other general information such as information concerning estates and businesses in Jamaica. Jamaica established an EOI Unit within its Large Taxpayer Office in Kingston on 16March 2012 and is in the process of streamlining its EOI procedures to improve its efficiency. One peer has specifically provided feedback that they are satisfied with the quality and timeliness of the information provided by Jamaica after the establishment of the EOI Unit. The EOI Unit is staffed with appropriately qualified and trained personnel who are responsible for the execution of all EOI requests.

C.1. Exchange-of-information mechanisms


Exchange of information mechanisms should allow for effective exchange of information.

Foreseeably relevant standard (ToRC.1.1)


290. Jamaica has bilateral tax treaties with 11 countries namely Canada, the Peoples Republic of China, Denmark, France, Germany, Israel, Norway, Spain, Sweden, the United Kingdom and the US. Jamaica is also a member of the CARICOM Multilateral Tax Treaty, which is signed by 11 jurisdictions, the other 10 are: Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Guyana, St.Kitts and Nevis, St.Lucia, St.Vincent and the Grenadines, and Trinidad and Tobago. Jamaicas EOI relationship with the USA is based on a tax treaty as well as a TIEA. Similarly, Jamaica already had a tax treaty with Denmark and has recently signed a TIEA too. Jamaica has also recently signed protocols to its tax treaties with Norway and Sweden to bring the same to international standard with regard to exchange of information. Jamaica has also signed Tax Information Exchange Agreements (TIEAs) with Faroe Islands, Finland, Greenland, Iceland and Macau, China. 291. The EOI agreements with Canada, China, France, Israel, the United Kingdom, the United States and the CARICOM Multilateral Tax Treaty provide for the exchange of information as is necessary for carrying out the provisions of the convention or of the domestic laws of the Contracting states concerning the taxes covered by the agreements. The EOI agreements with Spain, Norway, Sweden, Denmark, Faroe Islands, Finland, Greenland, Iceland and Macau, China use the word foreseeably relevant in place of necessary. The commentary to Article26 of the OECD Model Tax Convention, in paragraph5 refers to this standard of foreseeable relevance

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 91

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.

In respect of all persons (ToRC.1.2)


295. All agreements of Jamaica, except with Germany, either specifically mention that the exchange of information is not restricted by Article1 (Personal Scope) or information is to be exchanged for carrying out the provisions of the domestic laws. The domestic laws are applicable to all nonresidents also, therefore, it can be stated that even in absence of reference to Article1, the information can be exchanged in respect of all persons. The agreement with Germany, which provides for the exchange of information for the carrying out of the provisions of the agreement, is therefore only applicable provided one of the persons concerned is resident in one of the Contracting States. Therefore, all but one of Jamaicas agreements allow for exchange of information with respect to all persons.

Obligation to exchange all types of information (ToRC.1.3)


296. Jamaicas tax treaty with Spain and the protocols amending the tax treaties with Norway and Sweden include a paragraph in the exchange of information article similar to paragraph5 of Article26 of the OECD Model Tax Convention, which reads In no case the provisions of paragraph4 be construed to permit a contracting state to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting an agency or a fiduciary capacity or because it relates to

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

92 Compliance with the Standards: EXchanging Information


ownership interest in a person. Jamaicas TIEA with the USA also provides that the competent authorities of the Contracting states have authority to obtain and shall provide information from financial institutions (Art. 3(2) of the TIEA). Jamaicas TIEAs with Denmark, Faroe Islands, Finland, Greenland, Iceland and Macau, China also include the provisions contained in Article5(4) of the OECD Model TIEA, obliging the contracting parties to exchange all types of information. 297. Jamaicas bilateral tax treaties with all other countries (other than the jurisdictions to the CARICOM Multilateral Tax Treaty) do not contain paragraphs similar to paragraphs4 and 5 of Article26 of the OECD Model Tax Convention, but the domestic laws of these treaty partners do not have any provisions limiting the exchange of information. Therefore, under these treaties, Jamaica as well as all treaty partners may be able to exchange all type of information. 298. The CARICOM Multilateral Tax Treaty28 also does not contain provisions similar to paragraphs4 and 5 of OECD Model Tax Convention. It meets the standard with respect to 5 jurisdictions only: Antigua and Barbuda, Barbados, Belize, St.Vincent and the Grenadines and Saint Kitts and Nevis for the following reasons: In Dominicas and Trinidad and Tobagos Phase1 report, serious deficiencies were found in element B.1 regarding the access powers of the competent authority. This resulted in the element being assessed as not in place. This suggests that Dominica and Trinidad and Tobago cannot exchange all types of information under their respective domestic law. In St.Lucias Phase1 report, deficiencies have been found in element B.1 regarding the competent authoritys power to access confidential information relating to International Trusts. This suggests that St.Lucia cannot exchange all types of information under its domestic law. Phase1 review report of Grenada highlighted deficiencies to the authorities access powers due to presence of a domestic tax interest requirement and confidentiality provisions in its laws. Information about competent authorities powers to access banking information and obtain ownership, identity and accounting information for the purpose of exchange of information is not available with respect to Guyana, so it is not possible to confirm that the CARICOM Multilateral Tax Treaty with regard to Guyana meets the standard;

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 93

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.

Absence of domestic tax interest (ToRC.1.4)


300. Jamaicas tax treaty with Spain and the protocols amending the tax treaties with Norway and Sweden include a paragraph in the exchange of information article similar to paragraph4 of Article26 of the OECD Model Tax Convention, which reads: If the information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though the other State may not need such information for its own tax purposes. Accordingly, that other Contracting State neither shall nor decline to supply information solely because it has no domestic interest in such information. 301. The exchange of information agreement with the USA provides that, if the information available in the tax files of the requested states is not sufficient to enable compliance with the request, that State shall take all relevant measures to provide the Applicant State with the information requested (Art. 3(2) TIEA). Jamaicas TIEAs with Denmark, Faroe Islands, Finland, Greenland, Iceland and Macau, China also include the provisions contained in Article5(2) of the OECD Model TIEA, obliging the contracting parties to obtain and exchange information notwithstanding the information is not required for any domestic tax purpose. 302. The bilateral treaties with other countries do not contain similar language, but the domestic laws of all the treaty partners do not require the presence of domestic tax interest for the purpose of exchange of information. 303. In respect of Jamaicas CARICOM Multilateral Tax Treaty partners, a domestic tax interest requirement exists in the cases of Dominica, Grenada and Trinidad and Tobago. Accordingly, Jamaica may not be able to exchange information consistent with the standard with these three jurisdictions. It is recommended that Jamaica should take necessary measures to bring the
29. In the cases of Antigua and Barbuda and Barbados Phase1 reports include supplementary reports.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

94 Compliance with the Standards: EXchanging Information


exchange of information article in the CARICOM Multilateral Tax Treaty to be in line with Article26(4) of the OECDModel Tax Convention.

Absence of dual criminality principles (ToRC.1.5)


304. Jamaicas agreements do not contain any dual criminality provisions for exchange of information in tax purposes. The protocol to the JamaicaSpain treaty provides that information shall be exchanged without regard to whether conduct being investigated would constitute a crime under the laws of that contracting state if such conduct occurred therein. Therefore, there is no restriction to exchange information on this account.

Exchange of information in both civil and criminal tax matters (ToRC.1.6)


305. All of Jamaicas agreements for the exchange of information provide for exchange of information in both civil and criminal tax matters. 306. Jamaica has indicated that the procedures and agencies involved for gathering information are the same for civil and criminal tax matters, as far as the EOIUnit is concerned.

Provide information in specific form requested (ToRC.1.7)


307. Jamaicas TIEA with the USA provides that the Competent Authority of a Contracting State shall provide information, if specifically requested by the Competent Authority of the other State, in the form of depositions of witnesses and authenticated copies of unedited original documents (including books, papers, statements, records, accounts, or writings), to the same extent such depositions and documents can be obtained under the laws and administrative practices of such State with respect to its own taxes. The protocol to the treaty with Spain also provides that, if specifically requested the contracting state shall provide information to the extent allowable under its domestic laws, in the form of depositions of witnesses and authenticated copies of the original records. Though this provision is not provided in other tax treaties, there appears to be no restrictions in Jamaica as far as the same is consistent with its own domestic law and administrative practices. 308. In practice, Jamaica does not have any problems providing information in the form as requested by its treaty partners. In this regard, one EOI partner with a significant EOI relationship with Jamaica has confirmed that Jamaica has provided all information in the specific form requested. Another EOI partner with significant EOI relationship with Jamaica has indicated that they have not requested for information in any specific form.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 95

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.

Be given effect through domestic law (ToRC.1.9)


310. In order to ratify and therefore give effect to the provisions of the tax treaty, Cabinets approval is required before the treaty may be signed. After obtaining the Cabinets approval, the treaty is signed between the Minister of Finance or any other authorised Jamaican officials and the other contracting parties. No further approval from Parliament is required to ratify the treaty. The treaty is incorporated into Jamaican laws by Minister of Finance making the order pursuant to s.83 of the ITA. This order (which includes the actual treaty) is published by way of Notice in the Gazette that introduces the treaty into Jamaican Law. There are no unwarranted delays in bringing the signed agreements into force in practice. 311. Jamaicas agreement with the Spain requires the exchange of information regardless of whether Jamaicas tax authorities require the information for their own tax purposes. The Jamaican authorities can obtain information in the cases of continuing tax proceedings only and may not be able to meet the request in all cases with regard to treaty with Spain.
Determination and factors underlying recommendations
Phase1 determination The element is in place.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

96 Compliance with the Standards: EXchanging Information


Phase2 rating Largely Compliant Factors underlying recommendations 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. Recommendations Jamaica should put in place appropriate procedures to implement the new access powers provided under the amended Revenue Administration Act and monitor its effectiveness.

C.2. Exchange-of-information mechanisms with all relevant partners


The jurisdictions network of information exchange mechanisms should cover all relevant partners.

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 97

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.

Information received: disclosure, use, and safeguards (ToRC.3.1)


316. All of Jamaicas treaties and its one TIEA contain provisions for ensuring the confidentiality of the information received. The tax treaty with Germany (oldest) provides that any information exchanged shall be treated as secret and shall not be disclosed to any persons, authorities or courts other

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

98 Compliance with the Standards: EXchanging Information


than those concerned with the assessment or collection of the taxes which are subject of this agreement or determination of appeals or the prosecution of offence in relation thereto. 317. Provisions for keeping the information confidential are also available in the domestic laws of Jamaica. Section4 of the Income Tax Act provides that: Every person having any official duty or being employed in the administration of this Act shall regard and deal with all documents, information, returns, assessment list and copies of such lists relating to the income or items of the income of any person, as secret and confidential, and shall make and subscribe a declaration to that effect before a Justice of the Peace. Every such person having possession of or control over any documents, information, returns or assessment lists, or copies of such lists relating to the income or items of income of any person, who at any time communicates or attempts such information or anything contained in such documents, returns, lists or copies to any person (a) Other than a person to whom he is authorised by the Minister to communicate it; or (b) Otherwise than for the purpose of the Act, shall be guilty of an offence against this Act. 318. The penalty for breach of the confidentiality provisions in the Income Tax Act a fine not exceeding JMD 10000 (approximately USD102) or in default, imprisonment not exceeding 12months. 319. The standards of confidentiality require that information received under the exchange of information provisions shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed to persons and authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings and judicial decisions. 320. As per s.4 of the Income Tax Act, the Minister can authorise communicating the information to any person. Information obtained under the exchange of information mechanism should only be used by the persons authorised to use such information. For maintaining the confidentiality of the information received from the foreign tax authorities, it is necessary that the law or rules clearly specify which authorities can use the information exchanged. Section17 of the TAJ Act contains secrecy provisions similar

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 99

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.

All other information exchanged (ToRC.3.2)


322. The confidentiality provisions in the DTCs and in Jamaicas domestic law do not draw a distinction between information received in response to requests and information forming part of the requests themselves. As such, these provisions apply equally to all requests for such information, background documents to such requests, and any other document reflecting such information, including communications between the requesting and requested jurisdictions and communications within the tax authorities of either jurisdiction.

Ensuring confidentiality in practice


323. Legal provisions regarding the duty of confidentiality apply to information provided by a foreign Competent Authority to Jamaica and to information obtained by Jamaica during a tax enquiry. 324. The Jamaican competent authority has established procedures to ensure the confidentiality of the information exchanged. All documents pertaining to an EOI request are stamped confidential and the responses provided by Jamaica always contain the standard wording stating that the information is furnished under the provisions of a tax treaty and is subject to tax confidentiality under the provisions of that treaty. The Jamaica has started making outbound EOI requests to its EOI partners and Jamaica has confirmed that all information received are only disclosed to those persons so authorised under the terms of the agreement.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

100 Compliance with the Standards: EXchanging Information


325. All TAJ officials are bound by the duty of confidentiality. The EOI Unit, the audit team and the investigation and intelligence unit do not inform the subject of audit/investigation that the information sought is requested by its EOI partners unless it is absolutely necessary for them to do so. 326. In practice, the EOI files are kept in locked metal cabinets. The access to the EOI files is available to officials working in the EOI Unit only. Jamaicas peers who have provided input to this review have not indicated that there has ever been a breach of confidentiality concerning their exchange of information with Jamaica.
Determination and factors underlying recommendations
Phase1 determination The element is in place. Phase2 rating Compliant

C.4. Rights and safeguards of taxpayers and third parties


The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties.

Exceptions to requirement to provide information (ToRC.4.1)


327. Jamaica has replied that EOI articles in the treaties allow the non-disclosure of information requested by a treaty partner in the circumstances specified. The Jamaican tax treaties have generally provided that the Contracting States are not obliged to provide information which would disclose any trade, business, industrial, commercial or professional secret or the information the disclosure of which would be contrary to public policy. 328. The Jamaican competent authority has so far never relied on the above-mentioned provisions in its treaties to decline the provision of assistance to an EOI request. Input from Jamaicas peers confirm that no issues concerning the application of rights and safeguards in Jamaica have been experienced in EOI practice during the period under review.
Determination and factors underlying recommendations
Phase1 determination The element is in place.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 101

Phase2 rating Compliant

C.5. Timeliness of responses to requests for information


The jurisdiction should provide information under its network of agreements in a timely manner.

Responses within 90days (ToRC.5.1)


329. In order for exchange of information to be effective it needs to be provided in a timeframe which allows tax authorities to apply the information to the relevant cases. If a response is provided but only after a significant lapse of time the information may no longer be of use to the requesting authorities. This is particularly important in the context of international cooperation as cases in this area must be of sufficient importance to warrant making a request. Article5(6) of the OECD Model TIEA provides that: The competent authority of the requested Party shall forward the requested information as promptly as possible to the applicant Party. To ensure a prompt response, the competent authority of the requested Party shall: 1. Confirm receipt of a request in writing to the competent authority of the applicant Party and shall notify the competent authority of the applicant Party of deficiencies in the request, if any, within 60days of the receipt of the request; 2. If the competent authority of the requested Party has been unable to obtain and provide the information within 90days of receipt of the request, including if it encounters obstacles in furnishing the information or it refuses to furnish the information, it shall immediately inform the applicant Party, explaining the reason for its inability, the nature of the obstacles or the reasons for its refusal. 330. Jamaicas TIEAs with Denmark, Finland, the Faroe Islands, Greenland, Iceland, Norway, Sweden and Macau, China use the standard wording of the Model TIEA. The Protocol to the tax treaty with Spain also contains provisions akin to Article5(6) of the Model TIEA. In addition, it provides that in the event that the requested state has not provided the information within 6months of the receipt of the request, it shall inform the requesting State of the progress made in obtaining the requested information and provide with its best estimate within what period of time the request can be complied with. If the requested state is unable to comply with the request, it has to inform the requesting state and provide the reasons for its inability. The requesting State shall then decide whether or not to rescind its request. If the requesting state decides not to rescind the request, the

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

102 Compliance with the Standards: EXchanging Information


requesting and requested states shall agree on the proposed action under the Mutual Agreement Procedure provided for under the DTA. Further, the time restrictions mentioned in the Article do not in any way affect the validity and legality of information exchanged under the agreement. 331. Jamaicas DTCs, the CARICOM Multilateral Tax Treaty and its TIEA with the United States do not contain any provisions relating to the time frame for the provision of requested information or confirmations and status updates. Nevertheless, there are no legal restrictions on the ability of Jamaicas competent authority to respond to requests within 90days of receipt by either providing the information requested or an update on the status of the request. 332. During the period of review (i.e.1July 2009 to 30June 2012), Jamaica has reported that it has received 28requests for information30 from 2 EOI partners. Seven of these 28requests pertain to identity and ownership, accounting and banking information (see breakdown in section B.1) while the remaining requests were general information requests relating to contact details of individual taxpayers and other general information such as information concerning estates and businesses in Jamaica. The time taken to reply to these 28requests are summarised in the table below.
Response times for requests received during the three-year review period
1July 2009 to 1July 2010 to 1July 2011 to 30June 2010 30June 2011 30June 2012 Total Average no. Total number of requests received* Full response** 90days 180days (cumulative) 1year (cumulative) (a) > 1year (b) (c) (d) (a+b+c+d+e) 10 9 9 9 1 0 0 0 % 100 90 90 90 10 0 0 0 no. 8 8 8 8 0 0 0 0 % 100 100 100 100 0 0 0 0 no. 10 8 8 10 0 0 0 0 % 100 80 80 100 0 0 0 0 no. 28 25 25 27 1 0 0 0 % 100 89.3 89.3 96.4 3.6 0 0 0

Declined for valid reasons Failure to obtain and provide information requested

Requests still pending at date of review (e)

*  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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 103

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.

Old Procedure before the Establishment of the EOI Unit


334. Jamaican authorities advised that before the establishment of the EOI Unit, Jamaicas EOI partners were informed of the identity of the Competent Authority through the Ministry of Foreign Affairs. However, some EOI requests were still addressed to the wrong office including the Ministry of Foreign Affairs. Time was lost in redirecting the EOI request to the TAJ for follow-up. Once the EOI request reached the TAJ, the request was assigned to a tax officer/technical specialist to gather the requested information and to reply to the EOI partner. While it was the responsibility of the tax officer/ technical specialist to gather the information and reply to the EOI request, the entire process was not tracked or monitored by TAJ. There was also no requirement for the tax officer/technical specialist to provide status update to the requesting jurisdictions if the request could not be replied to within 90days. In addition, the assigned tax officer/technical specialist generally had other duties and responsibilities and priority was not given to EOI requests. As a result of all these deficiencies, it generally took a longer time for Jamaica to reply to EOI requests before the EOI Unit was established in March 2012.

New Procedure after the Establishment of the EOI Unit


335. To overcome various deficiencies, Jamaica has established an EOI Unit in March 2012 with the assistance of the Global Forum and the World Bank. The new EOI Unit has put in place various operating procedures and monitoring mechanisms. Under the new operating procedure, the EOI Unit will enter in their database the particulars of the request received and date of receipt and will send an acknowledgement letter to the requesting jurisdiction within 2 to 3 business day after receiving the EOI request. A status update is also provided if they are unable to furnish a complete response within 90days. It is noted that this procedure is not expressly documented in the draft Exchange of Information Manual that has been developed by the EOI Unit. While Jamaica has been able to respond to an EOI request within 90days in 25 out of 28 cases during the period of review, it is recommended that Jamaica monitor the new procedure and document these procedures accordingly in its Exchange of Information Manual to ensure that a status update is provided to its EOI partners if it is unable to provide a response within 90days.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

104 Compliance with the Standards: EXchanging Information


336. The EOI Unit have also further enhanced their EOI response system and under the new procedure, an email will be sent to the requesting jurisdiction informing them that the request has been replied to via registered mail. The EOI Unit will be able to resend the response if the EOI partner does not receive the registered mail within a reasonable timeframe. 337. The new procedures and monitoring mechanisms that Jamaica has put in place have started yielding positive results and Jamaicas efforts have been recognised by one of Jamaicas main EOI partner. The EOI partner acknowledged that the quality and timeliness of reply has improved significantly after the establishment of the EOI Unit. The other EOI partner has indicated that other than one EOI request where Jamaica has taken almost 2years to reply, they are otherwise satisfied with the quality of information provided by Jamaica.

Organisational process and resources (ToRC.5.2)


338. All of Jamaicas DTCs and the TIEAs indicate that the Minister responsible for finance or his authorised representative is the competent authority. Arising from an Act of Parliament passed in 2011 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.

Resources before the EOI Unit was established


339. Before the EOI Unit was formally established, no dedicated resources were allocated to handle international EOI matters and all incoming EOI requests received by the Competent Authority were dealt with by a technical unit and allocated randomly among the available tax officer/technical specialist who had end-to-end responsibility from arranging to collect the information to furnishing a reply to the EOI partner.

Resources after the EOI Unit was established


340. Jamaica established its EOI Unit on 16March 2012 within the Large Taxpayer Office (LTO) of the TAJ in Kingston. The LTO works under the supervision of the Deputy Commissioner General Operations who in turn reports to the Commissioner General. The EOI Unit is responsible for both incoming and outgoing EOI requests. The day-to-day operation of the EOI Unit is undertaken by two officers who are supported by around 10 other officers in various capacities. These two officers are the Senior Exchange of Information Officer and the General Manager of the EOI Unit.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 105

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.

Organisational Process before EOI Unit was Established


344. During the three year review period and specifically prior to the establishment of EOI Unit in March 2012, there were no defined procedures with regard to handling incoming EOI requests. There were no specified authorities responsible for gathering and proving information to foreign authorities. The incoming requests were handled on a case-by-case basis as the volume of requests was relatively low. The requests for information generally related to contact information of taxpayers as well as identity information where the Jamaica authorities were generally able to obtain the information

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

106 Compliance with the Standards: EXchanging Information


directly from its the tax records and databases. In some rare cases, a tax audit may be required to gather and collect the requested information from taxpayers.

Organisational Process after EOI Unit was Established


345. After the establishment of the EOI Unit, the TAJ has embarked on drafting an Exchange of Information Manual setting out the procedures to handle incoming and outgoing EOI requests and defining the roles of various officials involved in the processes. The EOI Manual is still in its draft form and is continuously been updated by the EOI Unit to ensure that it reflect international best practices. 346. All EOI requests are received by the Acting Commissioner General of TAJ in the capacity as the appointed Competent Authority of Jamaica. The request is then forwarded to the EOI Unit functioning under the overall supervision of the Competent Authority. 347. The Senior General Manager of the Large Taxpayer Office is directly responsible for monitoring the performance of the effective exchange of information, and reviews status of various information requests on a regular basis. All outstanding EOI requests are updated in Microsoft Task Manager for monitoring purposes. As Jamaica has not received many requests requiring substantial monitoring, it is at present not using any tracking system. Jamaica has started pilot trial of the EOI tracking and monitoring system developed by the Global Forum and the World Bank and has indicated that they will adopt the system for use in the EOI Unit after the system is fully developed. 348. Senior EOI Officer (SEOI) logs all incoming EOI requests in Microsoft Excel file and a physical file with a unique reference number is created for each request. Upon receiving the EOI request, the Senior EOI officer or the General Manager will acknowledge the receipt of request by writing to the requesting jurisdiction. The reference number assigned to the request will also be sent to the requesting jurisdiction for the future references. The acknowledgement is done within 2 to 3 working days of the receipt of request from the competent authority. The physical files are kept in locked metal cabinet in the General Manager of EOI Units room. The room is locked after office hours. 349. After sending the acknowledgement, a preliminary review is carried out by the Senior EOI Officer to ensure that the request conforms to the domestic legislation and the relevant EOI agreement. In cases where it involves legal interpretation of provision of the domestic law or the treaty or agreement, assistance from the technical and legal specialists is sought. The EOI Unit advised that they have not sought any clarification or additional

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 107

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

108 Compliance with the Standards: EXchanging Information


354. If after 90days from the date of the receipt of request, it is not possible to provide the requesting jurisdiction with all of the requested information, a letter is sent to the requesting jurisdiction to explain the situation. The letter will also include an estimate of when the EOI request will be responded to fully. The tracking is currently conducted by the Senior EOI Officer through the calendar function in Microsoft Outlook. 355. The EOI Unit advised that they rarely receive feedback about the usefulness of information provided to its EOI partners.

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.

Absence of unreasonable, disproportionate or unduly restrictive conditions on exchange of information (ToRC.5.3)


359. Exchange of information assistance should not be subject to unreasonable, disproportionate, or unduly restrictive conditions. There is no evidence of any such conditions in practice.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

Compliance with the Standards: EXchanging Information 109

Determination and factors underlying recommendations


Phase1 determination This element involves issues of practice that are assessed in the Phase2 review. Accordingly no Phase1 determination has been made. Phase2 rating Largely Compliant Factors underlying recommendations The operation and efficiency of the EOI Unit could not be fully assessed as it was established in March 2012 towards the end of the period under review. Recommendations Jamaica should monitor the functioning of the new EOI Unit and the new processes that were put in place to ensure that EOI requests are dealt with expeditiously. Jamaica should also monitor the new procedure in place to provide status updates to Jamaicas EOI partners in cases where the EOI Unit is unable to provide a complete response within 90days.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 111

Summary of Determinations and Factors UnderlyingRecommendations

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

112 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS


Factors underlying recommendations Phase1 determination: Companies incorporated outside of Jamaica but having The element is in their central management place, but certain and control in Jamaica aspects of the legal are not required to provide implementation of information identifying the element need their owners as a part of improvement. registration requirements and (continued) foreign companies are not required to compulsorily keep a share register in Jamaica. Therefore, the information that identifies the owners of foreign companies is not available. Determination Phase2 rating: Partially 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. Recommendations As Jamaica asserts a sufficient nexus for taxing jurisdiction on a management and control basis, it should require submission of information on its owners when foreign companies register or when they apply for their tax file number and Jamaica should take necessary steps to require foreign companies to keep register of Jamaican shareholders in Jamaica 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 identity information of all relevant entities and arrangements. 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.

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 113

Determination Phase2 rating: Partially Compliant (continued)

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

114 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS


Factors underlying Recommendations recommendations Banking information should be available for all account-holders. (ToR A.3) Determination Phase1 determination: The element is in place. Phase2 rating: Compliant Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (Tor B.1) Phase1 determination: The element is in place. Phase2 rating: Largely Compliant While the deficiencies identified in the Phase1 review do not appear to have had any adverse impact on effective EOI in practice, the exercise of access powers has been limited and a dedicated EOI Unit was put in place 4months before the end of the review period. The amendments to the Revenue Administration Act to address the domestic tax interest issue 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 continue to implement the recommendations identified in Phase1 review expeditiously and ensure that its procedures are exercised as appropriate by the EOI Unit.

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 115

Determination Phase2 rating: Largely Compliant

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.

Phase2 rating: Largely Compliant

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

116 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS


Factors underlying Recommendations recommendations The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4) Determination Phase1 determination: The element is in place. Phase2 rating: Compliant The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5) Phase1 determination: This element involves issues of practice that are assessed in the Phase2 review. Accordingly no Phase1 determination has been made. Phase2 rating: Largely Compliant The operation and efficiency of the EOI Unit could not be fully assessed as it was established in March 2012 towards the end of the period under review. Jamaica should monitor the functioning of the new EOI Unit and the new processes that were put in place to ensure that EOI requests are dealt with expeditiously. Jamaica should also monitor the new procedure in place to provide status updates to Jamaicas EOI partners in cases where the EOI Unit is unable to provide a complete response within 90days.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

ANNEXES 117

Annex 1: Jurisdictions Response totheReport31


While Jamaica agrees with the conclusions of the report, there are some factual details that are incorrect, and so would like to provide the following corrections and clarifications:

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

ANNEXES 119

Annex 2: List of All Exchange-of-Information Mechanisms

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

120 ANNEXES

Annex3: List of All Laws, Regulations and OtherMaterialReceived

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

ANNEXES 121

Anti-Money Laundering Act/Regulations


The Proceeds of Crime Act 2007 The Financial Investigation Division Act 2010 The Financial Services Commission Act 2001 The Securities Act 1993 POCA (MLP) Regulations2007 Bank of Jamaica Anti-Money Laundering(AML)/Combating the Financing of Terrorism(CFT) Policy 1999 Bank of Jamaica 2004 Guidance Note on the Detection and Prevention of Money Laundering and Terrorist Financing Activities.

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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/.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

Overview of the financial sector and relevant professions


The financial services industry in Jamaica consists of commercial banks, merchant and trust banks, credit unions, building societies and other licensees under the Financial Institutions Act. The Ministry of Finance and Planning is responsible for the policy, licensing and regulation of deposit taking institutions under Banking Act, Financial Institutions Act and Building Societies Act. At the end of December 2008, there were 14 supervised deposit-taking institutions (excluding credit unions), consisting of seven commercial banks, three merchant banks (FIA licensees), and four building societies. The BOJ also has supervisory and licensing authority over Cambios (foreign exchange

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

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.

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

ANNEXES 129

Annex 5: People Interviewed During On-site Visit

Ministry of Finance and Planning


Representatives of the Ministry of Finance and planning

Tax Administration of Jamaica


Representatives of the Tax Administration of Jamaica

Companies Office of Jamaica


Representatives of the Companies Office of Jamaica

Registrar Generals Department


Representatives of the Registrar Generals Department

Bank of Jamaica
Representatives of the Bank of Jamaica

Financial Service Commission


Representatives of the Financial Service Commission

Financial Investigation Division


Representatives of the Tax Administration of Jamaica

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

130 ANNEXES

Attorney Generals Chambers


Representatives of the Attorney Generals Chambers

Jamaica International Financial Service Authority


Representatives of the Jamaica International Financial Service Authority

PEER REVIEW REPORT PHASE 2 JAMAICA OECD 2013

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT


The OECD is a unique forum where governments work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to coordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The European Union takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisations statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members.

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

Global Forum on Transparency and Exchange of Information for Tax Purposes

PEER REVIEWS, PHASE 2: JAMAICA


This report contains a Phase 2: Implementation of the Standard in Practice review, as well as revised version of the Phase 1: Legal and Regulatory Framework review already released for this country. The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by 120 jurisdictions, which participate in the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transparency and exchange of information for tax purposes. These standards are primarily reected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004. The standards have also been incorporated into the UN Model Tax Convention. The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. Fishing expeditions are not authorised but all foreseeably relevant information must be provided, including bank information and information held by duciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard. All members of the Global Forum, as well as jurisdictions identied by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined Phase 1 and Phase 2 reviews. The Global Forum has also put in place a process for supplementary reports to follow-up on recommendations, as well as for the ongoing monitoring of jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once approved by the Global Forum and they thus represent agreed Global Forum reports. For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the published review reports, please refer to www.oecd.org/tax/transparency and www.eoi-tax.org.
Consult this publication on line at http://dx.doi.org/10.1787/9789264206151-en This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Visit www.oecd-ilibrary.org for more information.

ISBN 978-92-64-20614-4 23 2013 74 1 P

9HSTCQE*cagbee+

Вам также может понравиться