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JSE boss expects retroactive tax breaks for junior stocks

Published:Wednesday | April 6, 2016 | 12:00 AM
JSE general Manager Marlene Street Forrest.

The decision of the month-old Holness administration to retain the original tax incentive structure for junior stock market companies should see at least eight companies getting double the breaks they initially expected.

On the face of it, the decision appears to roll back the adjustments to the inventive regime for junior listings that were

implemented at the start of 2014, under the tax-reform programme. Before then, new listings got 10 years of tax breaks - the first five at 100 per cent, and the

second five at 50 per cent.

To date, 29 companies have listed on the Junior Market of the Jamaica Stock Exchange (JSE), wooed by tax breaks. While the first 21 listings got the full 10 years of corporate income tax waivers, under the revised incentive programme, eight companies - starting with Knutsford Express Limited in January 2014 and ending with Key Insurance Company Limited on March 31, 2016 - were limited to five years of waivers.

But now the new Government has signalled that it will be returning to the original programme of incentives, a decision that JSE boss Marlene Street Forrest sees as retroactively covering all junior listings that had originally missed the 10-year window.

"The minister of finance [Audley Shaw] informed us that companies will pay no corporate income tax for five years, and then at five more years at 50 per cent of the prevailing rate. So it would revert to what was there prior to the change," said Street Forrest in an interview on Monday. "This will also cover the companies listed under the five-year regime," she said.

When pressed on her conclusion, Street Forrest reasoned that it logically follows that the benefits should extend to those companies already listed under the truncated regime.

Final affirmation of the Holness administration's intent, however, awaits official documentation from the Ministry of Finance and the Attorney General's Department.

"I am pretty sure those benefits will be extended to 10 years. That is my understanding," the JSE general manager said.

Developed under Golding

The JSE Junior Market was developed and finalised in 2009 under a previous Jamaica Labour Party administration led by Bruce Golding. As a condition of receiving the tax breaks, companies on the junior exchange were required to stay listed for at least 15 years.

The eight companies expected to gain the additional five years of 50 per cent waivers are: Knutsford Express, Sweet River Abbatoir, CAC 2000, tTech, IronRock Insurance, Jetcon, ISP Finance and Key Insurance. The latter six were listed this year.

The JSE maintains that the shortened tax breaks had negatively impacted the attractiveness of the market. It's a position also held by members of the brokerage community.

"We are very pleased that the benefits will revert to the original ten years. There was a dearth of companies listing on the exchange ... . We are looking forward to more companies listing on the market," Street Forrest said.