JIFSA crafting business, marketing plans for offshore centre
More than half the legislation that underpins Jamaica’s ambitions for an offshore financial centre have already got the approval of lawmakers.
Now the Jamaica International Financial Services Authority (JIFSA) is evaluating the appropriate tax regime that will best give life to the plan to position the island as a low-tax jurisdiction and a hook for big overseas businesses.
Jamaica has been working at the project for more than eight years, and appears to have at least another three years to go. It wants to capitalise on an international services sector that manages private financial wealth worth more than US$7 trillion globally.
Parliament has so far passed four of seven bills required to facilitate the administration of international financial and business services, and the remaining three are expected to be competed in the short to medium term, said JIFSA Chairman Eric Crawford.
“As to the next steps, the reality is that we will not attract investors simply by having modern legislation in place. There are other components that we will have to finalise in order to be deemed attractive to investors,” Crawford said in emailed responses to Financial Gleaner queries.
“For instance, we are currently evaluating an appropriate tax regime to complement our legislative framework to make Jamaica more competitive,” he said.
Crawford, a tax expert working in the private sector as a partner at PricewaterhouseCoopers Jamaica, said that while Jamaica is careful not to be perceived as a tax haven, given the global focus on transparency and regulations that govern the industry, “taxation is an important consideration for players in this business”.
In addition, he said, they have to strengthen the current infrastructure and resources to facilitate the smooth operation of the industry, which is accustomed to doing business at an exceptionally high standard.
That includes, for example, the incorporation of international business entities through the Companies Office of Jamaica, or the regulation and monitoring of international corporate service providers through the Financial Services Commission.
Crawford said JIFSA would also be engaging and sensitising local businesses and professionals such as lawyers, accountants, fund managers and others about the opportunities that exist with the establishment of the services sector.
Preparation for full capitalisation
The authority is also planning to establish relevant partnerships and create synergy locally and overseas, to ensure that Jamaica is prepared on all levels to fully capitalise on the business.
Judging by the numbers, JIFSA is ramping up its work. It has been allocated $29.5 million in this year's Budget, which is 13 times the $2.3 million allocated the previous year.
Crawford said the authority is currently finalising a strategic business and marketing plan that will become the platform for it to launch the brand and engage the global market.
Asked if local businesses could migrate to offshore status as a result of the new legislation and remain in Jamaica, the JIFSA chairman said an international business company is prohibited from conducting business within the domestic market, other
than for basic administrative purposes.
However, local businesses could incorporate international business companies under the International Business Companies Act, which they may use to conduct business outside of Jamaica.
"This could prove useful for companies such as GraceKennedy, J. Wray & Nephew, Jamaica Broilers, Scotiabank and Proven, which already have business interests in various jurisdictions outside of Jamaica," Crawford said.
He added that currently there are "quite a few" Jamaican businesses that utilise jurisdictions such as Cayman Islands, Bermuda, St Lucia and Barbados for setting up holding companies for their international operations.
"Our aim is to make Jamaica the favoured option for this purpose," the JIFSA chairman said.
Crawford said JIFSA's marketing strategy is to position Jamaica as a sophisticated jurisdiction providing high-value services that are aligned with international best practices, regulations and standards for disclosure and transparency as prescribed by international regulatory bodies such as Global Forum and the Organisation of Economic Co-operation and Development.
"No reputable investor will want to do business in a jurisdiction that flouts these requirements," he added.
Generally, JIFSA will be targeting intermediaries and businesses in the major financial centres such as New York and London that provide portfolio and wealth management services for high net worth individuals globally, Fortune 500 companies, legal and accounting firms, and trust and corporate management entities.
As to whether there will be symbiosis between JIFSA and the special economic zones (SEZs), Crawford said there will most likely be an overlap in some respects, to the extent that some entities that are established in the zones might elect to take advantage of Jamaica's international financial services.
"For example, investors doing business within the SEZ may have related business they wish to conduct internationally. Being in Jamaica would afford them the convenience of being able to retain local trust and corporate service providers to set up corporate structures under our financial services legislation to facilitate transactions outside of Jamaica," he said.
JIFSA was established in 2011 as part of Jamaica's effort to attract new investments, stimulate job creation and generate revenues. Its main role is to market and promote Jamaica as a jurisdiction for international financial and business services.