SEZ's Simplified: Part 2
Phoenix Business Insight Ltd
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In our last article we mentioned the various tax incentives that SEZ Developers benefit from, such as promotional tax credits and customs duty exemption.
Before these benefits become available, the Developer must prove the ability to make the necessary investments, among other considerations. The Developer will be required to show that they have issued and paid-up share capital — the amount of money put into the company by owners— of at least $1,500,000.00 USD.
Your business may not have reached that financial milestone as yet, but that’s okay, as you may fall into the second category as an Occupant. Occupants are persons who operate businesses in the SEZ under a sub-agreement between themselves and a Developer. Unlike Developers, they only need to prove a share capital of USD $25,000.00, and are required to make investments totaling USD$50,000.00 within the first year of operation. The Occupant will enjoy all the benefits given to the Developer except exemption from Transfer Tax. Additionally, the Occupant will also enjoy relief from income tax on dividends and asset tax exemption.
Finally, there are Zone Users. These persons must also make an application to the developers at a cost of USD $100.00 before operating within the SEZ. Though they are also expected to make investments totaling USD$50,000.00 within the first year of operation, they do not enjoy any of the benefits given to Developers and Occupants.
Now that we’ve covered who can operate in an SEZ, we have to look at what businesses those persons may engage in. Jamaica’s Special Economic Zone Act does not explicitly state the business that may be conducted. Instead, it outlines a fixed list of prohibited business which include:
This allows for increased diversity in the types of business conducted in each economic zone.
It is important to note that this is merely an overview of a more complexed feature. In order to truly analyze the nuances of whether entering a Special Economic Zone is suitable for your business, we recommend consulting with business experts such as Phoenix Business Insights Ltd. to guide you through the process and requirements.
While Special Economic Zones may seem to be geared towards the manufacturing and shipping industries at present, the feature is projected to continue its expansion as more diverse investment opportunities arise providing significant benefit to both the private investor and the country’s economic growth.