Free Zone entities urged to start transition to special economic zone
The Jamaica Special Economic Zone Authority (JSEZA) is urging companies operating in industrial areas that were once designated free zones to start the process now to transition to the special economic zones (SEZ).
In a full page ad in today's Sunday Gleaner, the JSEZA reminded free zone companies that the deadline to complete the transition to the SEZs is the end of December. It says incentives and benefits given to these entities with free zone status will also end in December.
And it says those companies transitioning must submit the necessary documentation by July 31, which will take 60 working days to process.
"If you are expanding or relocating you must transition now," the JSEZA advised.
It also says entities operating without a Free Zone Gazette or an authorisation letter are operating in breach of their designation and must transition to the SEZ now.
"In keeping with the SEZ Act free zone entities must come into the SEZ regime prior to making any amendments to business activities or existing location," the authority continued.
The SEZ Act was passed in 2016 to replace the law that established free zones, which have been phased out to conform with international free trade rules against export subsidies.
Under the new system, developers in the zones will receive a raft of tax incentives, but must have minimum paid up capital of US$1.5 million, while the occupants of a designated SEZ must have US$25,000 of paid up capital.
SEZ occupants are also required to invest a minimum US$50,000 in equipment, buildings and plant during year one, while small and medium-sized entities with the potential for high growth will be considered on a case-by-case basis by JSEZA.
SEZ companies will pay corporate income tax at a rate of 12.5 per cent. There are no taxes on dividends and none on rental of property within the zone. They can also get a tax credit against funds spent on research and development, capped at 10 per cent of taxable income, among other incentives.
Existing free zone operators, who currently pay no corporate taxes, will be subject to the applicable 12.5 per cent rate, if they chose to migrate to the SEZ.
The application fee to the SEZ, which is non-refundable and is a one-time charge, is US$3,000 for developers and US$1,500 for other occupants. Thereafter, SEZ companies will be required to pay an annual fee of US$0.20 per square foot of building space and US$0.05 for non-building space.