BENEFITS UNDER the Junior Market of the Jamaica Stock Exchange (JSE) will come to an end by December 21, 2021, Finance Minister Dr Peter Phillips announced in the House of Representatives yesterday.
"We cannot sustain the services that we need and secure the revenues that we need on the basis only that anyone who is going to produce can only do so if they pay no taxes," Phillips said.
The minister, who was outlining the framework for omnibus tax-incentives legislation which he tabled in the House, noted that through the Junior Market, entities were provided with productivity incentives.
Phillips, however, said the new regime, which is a structural benchmark of the country's extended fund facility deal with the International Monetary Fund, would reward "producers and others with effectively lower rates".
The Junior Market was launched on April 1, 2009. It was designed to encourage and promote investment in Jamaica's entrepreneurship, employment, and economic development. The JSE allows equity financing rather than debt financing and is designed for the benefit of raising capital of up to J$500 million for small and medium enterprises.
Companies listed on the Junior Market pay zero per cent income tax for the first five years, 25 per cent of regular tax rate for years six to 10, and receive exemptions on transfer tax on shares, as well as stamp duty on such transfers.
Phillips announced that a mechanism would be developed to allow for the capping of the tax expenditures that would arise from the operation of the transitional taxation regime. He told fellow legislators that companies listed on the exchange prior to January 1, 2014, would continue to enjoy their current benefits for the remainder of their unexpired incentive period.
As for companies that list between January 1, 2014, and December 31, 2016, Phillips said they would enjoy full relief from income tax for a period of five years from the date of listing.
"The second component of the original plan, which is for 50 per cent relief from the second five years, will be eliminated because that relief is embodied in the measures that are contained in the legislation," Phillips said.