Cake-maker Tortuga gets free zone status
Tortuga International Holdings Limited says it plans to use its recently acquired free zone designation to boost production and tap the growing regional and international demand for its products.
The cake maker was granted the status for its new plant on Retirement Road in Cross Roads, Kingston, ahead of the roll-out of operations at that location slated for mid-year.
Tortuga spent more than US$1 million to relocate its operations from Montego Bay last year to the Retirement Road property, which is held by parent company Jamaica Producers Group. Producers bought the business in 2012.
"The designation of free zone status allows our company to invest without reservation in the building of a new state-of-the-art bakery, while bringing more jobs and sustained employment to the country," said Tortuga CEO Marcus Simmonds.
It positions the company to grow and compete internationally "by capitalising on the growing export trade," he told Wednesday Business. Simmonds declined to comment on the company's volume output and the relative size of its Jamaican market to the group, citing competitive reasons.
Tortuga operates in three Caribbean countries - Jamaica, Cayman Islands and Barbados - and supplies both Jamaica and regional markets with its popular rum cakes. It also has offices in Miami, Florida, which handle customer care and distribution.
The office in Barbados, Grand Cayman and Jamaica also act as customer-care centres.
The decision to apply for free zone designation in Jamaica was preceded by an in-depth review of the regional business to determine which of the jurisdictions where it now operates would best deliver the company's growth targets, Simmonds said.
"As such, we sought free zone status in conjunction with our feasibility studies on a new factory, and having been awarded the status, this made the decision more compelling to move forward in Jamaica," he said.
Companies operating in free zones get a 100 per cent tax break on profits.
They are also allowed to import raw material, items for equipping premises such as office equipment and material for the construction or repair of their premises free of customs stamp, stamp duties and General Consumption Tax (GCT).
Though the free zones are still referenced as such, the Export Free Zones Act of 1982 was recently repealed by the Special Economic Zone Act.
With the SEZ law now in force, Tortuga and other free zone companies are expected to start paying income tax in a few years, says Jamaica Producers CEO Jeffrey Hall. Producers is also invested in another free zone company, Kingston Wharves Limited.
Companies essentially have another four years before they are all migrated to SEZ status, according to Hall. At that point, they will begin paying income tax. The law stipulates a rate of 12.5 per cent, which is half of what non-regulated Jamaican companies currently pay.
Tortuga's designation as a free zone entity took effect in the latter part of 2015 "and we are now working very closely with the Government to get the factory up and running by mid-year," Simmonds said.
Hall said Tortuga is likely to reinvest in upgrades to push production even higher, when asked about plans for the expected tax savings.
"We are going to make the investment in a way that brings immediate jobs to Jamaica. We have great opportunities to expand into new markets internationally, where we have opportunities to supply big global retailers and tourism markets," he said, describing the "purpose-built facility" at Cross Roads as a strategic move.
Tortuga will also bring home some of its administrative functions from Miami when the site opens later this year.
"We also are going to locate part of our international customer-service centre here in the facility," Hall said.
"Right now, we do the order-taking out of Miami, so we want to do some of those things here in Kingston, with the expansion programme."