WORLD TRADE  
ORGANIZATION   
G/SCM/N/243/JAM 
19 July 2012 
 (12-3987) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Continuation of Extension under SCM Artic le 27.4 of the Transition Period for 
the Elimination of Export Subsidies Pursuant to the Procedures Contained 
in the General Council Decision in Document WT/L/691 
 
Updating notification 
 
JAMAICA 
 
  The following communication, dated 18 July 2012, is being circulated at the request of the Delegation of Jamaica.  
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  Pursuant to the procedures contained in the General Council Decision in document 
WT/L/691, Jamaica hereby submits the followi ng updating notification for 2011 to enable the 
Committee to conduct its annual review of complianc e of the standstill and transparency requirements 
as required under the Decision.   
 
A. E
XPORT INDUSTRY ENCOURAGEMENT ACT 
 
1. Description of the programme 
 
 The Export Industry Encouragement Act was established as an incentiv e framework geared 
toward the encouragement of export industries.    2. Period covered by the notification 
 
 Programme description for the calendar year 2011. 
 3. Policy objective and/or purpose of the subsidy 
  The objective is to encourage investment a nd growth in export manufacturing industries. 
 
4. Background and authority of the subsidy 
  Law 49 of 1956  Law 13 of 1960  Act 11 of 1968  
 Act 42 of 1969  
 Act 56 of 1974 G/SCM/N/243/JAM 
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  5. Form of the subsidy 
 
 Companies that export 100 per cent output to hard currency markets outside of CARICOM are exempt from income tax on profits and fu ll exemption from import duties on capital goods and 
raw materials for use by the approved exporter in the production process.   
 
 Partial exporters (companies exporting less th an 100 per cent of output) are entitled to an 
export allowance that may be deducted from taxable income with the level of tax relief linked to 
exports.  
6. To whom and how the subsidy is provided 
 
 Any company registered or incorporated in Jamaica and whose products are exclusively for 
sale to hard currency markets outside of CARICOM is  eligible to a tax holiday on profits earned from 
the manufacture of the approved product as well as duty-free importation of raw material and capital 
goods for use in the production process.   
  The company must be declared an "approved export manufacturer" in relation to an "approved export product" by the Minister of Indus try.  Having a product designated an approved 
product and the company an approved export manufact urer entitles the company to income tax and 
duty benefits as outlined above.   
 
 Partial exporters (companies exporting less th an 100 per cent of output) are entitled to an 
export allowance as described at paragraph 5 above.   To benefit from the allowance, a 5 per cent 
threshold of export sales to total sales must apply and exports must be to markets outside of the 
CARICOM region.   
 
7. Subsidy per unit 
  Estimated revenue foregone as a result of relief under the programme was US$0.5m.   
 8. Duration of the subsidy 
  Tax and duty benefits are allowed for a period of up to ten (10) years.    9. Statistical data on the impact of the programme 
 
 Historically, the programme has contributed to significant growth in exports of the 
non-traditional manufacturing sub-sectors (apparel, leather, plastic).  This remains an important incentive programme for manufacturing companies wi shing to export to third country markets.  
Five hundred (500) persons were employed under th is programme during the period under review.   
 
B. J
AMAICA EXPORT FREE ZONES ACT 
 
1. Description of the programme 
  The Jamaica Export Free Zones Act provides an  incentive and regulatory framework for the 
operation of Free Zones in Jamaica.   
 
2. Period covered by the notification 
  Programme description for the calendar year 2011.  G/SCM/N/243/JAM 
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  3. Policy objective and/or purpose of the subsidy 
 
 The objective is to encourage investment, expor ts and foreign exchange earnings and to create 
employment opportunities.    
4. Background and authority of the subsidy 
 
 Act No. 18 of 1982  Act No. 12 of 1985  Act No. 16 of 1991 
 Act No. 24 of 1996 
 5. Form of the subsidy 
  Approved Free Zone enterprises are entitled to:   
 
• Duty-free importation of capital goods, cons umer goods, raw materials or articles for 
use in connection with the approved product;   
• Duty-free treatment of articles for the c onstruction, alterati on, and repair of 
equipment of premises in the Free Zones;   
• Total relief from income tax in respec t of profits or gains earned from approved 
activities;   
• Repatriation of profits (since liberalizati on of the foreign exchange market in 1991 
there are no restrictions on the repatriation of profits);    
• Exemption from the normal fees payable with respect to work permits.   
 
6. To whom and how the subsidy is provided 
 
 Companies approved to operate in the Free Zone s must be registered or incorporated in 
Jamaica under the Companies Act to carry out an y of the following prescribed activities:   
 
• warehousing and storing 
• manufacturing operations 
• transshipment operations • loading and unloading operations • exporting • importing 
• service operations, including banking, data processing and telemarketing, insurance, 
professional services 
• packing and shipping • assembling • processing, refining, purifying, mixing, merchandising 
 
 Approvals for free zone status are made by the Minister of Industry on the recommendation of 
the Free Zone Council, the regulatory body appointed to supervise the operations of the Free Zones.   
  By policy decision of April 1997, Free Zone manufacturing entities are allowed to sell up to 
15 per cent of output on the local market.  Free Zone goods sold onto the local market are subject to 
the applicable duties and charges.   G/SCM/N/243/JAM 
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  7. Subsidy per unit 
 
 The estimated revenue foregone as a result of relief under this programme was US$2.6m.   
 8. Duration of the subsidy 
  Incentives granted to Free Zone entities are for an indefinite period.   
 9. Statistical data on the impact of the programme 
 
 This programme continues to be a critical fa ctor in Jamaica's economic development.  The 
number of persons employed in the free zones currently  stands at over 4,000 and the programme plays 
an important support role in Jamaica's investment pr omotion and domestic capacity building efforts.   
 
C. I NDUSTRIAL INCENTIVES (FACTORY CONSTRUCTION ) ACT 
 
1. Description of the programme 
  Provides an enabling framework for the pr ovision of factory space in Jamaica.   
 2. Period covered by the notification 
  Programme description for the calendar year 2011.  3. Policy objective and/or purpose of the subsidy 
 
 To facilitate and encourage the construction of factories in Jamaica.   
 4. Background and authority of the subsidy 
  Law 9 of 1961  Law 30 of 1961 
 Act 23 of 1972 
 5. Form of the subsidy 
  An approved builder under the Industrial Incen tives Factory Construction Act is entitled to:   
 
• Duty-free importation of items or articles for factory construction;   
• Enter into an agreement with a recognized enterprise for the lease of the factory;   
• Be granted relief from income tax for 15 y ears in respect of income from the lease of 
the factory or from profits made upon its sale.   
6. To whom and how the subsidy is provided 
 
 Approved builders are granted a licence by the Mi nister of Industry to construct factories.  
Approved builders providing factory space for companies having recognized status - i.e. status under 
the Export Industry Encouragement Act (EIEA) or the Industrial Incentives Act (IIA) - can qualify for 
the incentives mentioned above.  Free Zone developers are also eligible for incentives under the Act.   
  G/SCM/N/243/JAM 
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  7. Subsidy per unit 
 
 There are very few beneficiaries under the pr ogramme.  Revenue foregone  is negligible.   
 8. Duration of the subsidy 
  Income Tax Relief is available for fifteen (15) years in respect of income from the lease of the 
factory or from profits made upon its sale.    9. Statistical data on the impact of the programme 
 
 Please see section 7 above.    
D. F
OREIGN SALES CORPORATION ACT 
 1. Description of the programme 
 
 A legislative framework for the operation of Fore ign Sales Corporation (FSCs) in Jamaica.   
 2. Period covered by the notification 
 
 Programme description for the calendar year 2011. 
 3. Policy objective and/or purpose of the subsidy 
  To attract foreign investment into the country  and to promote Jamaica as an attractive FSC 
location.   
 4. Background and authority of the subsidy 
  In November 1984, Jamaica was certified as a qualifying Foreign Sales Corporation (FSC) 
jurisdiction and enabling legislation, the Foreign Sal es Corporation Act, was passed shortly thereafter.   
 
5. Form of the subsidy 
 
• FSCs are exempt from Jamaican Corporate Income Tax on their foreign trade income 
as long as they remain designated.   
• No income tax is imposed in Jamaica on di vidends paid to foreign shareholders by a 
designated FSC. 
• Investment income or carrying changes earned by an FSC are relieved from income 
taxes.   
• FSCs are entitled to import into Jamaica equipment, material and machinery free of 
all import duties.   
6. To whom and how the subsidy is provided 
 
 The Minister of Industry has the authority to grant certificates of designation to FSCs locating in Jamaica.  Incentives as outlined above are available to FSCs.   
 G/SCM/N/243/JAM 
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  7. Subsidy per unit 
 
 Revenue foregone is negligible as there are few beneficiaries under the regime.   
 8. Duration of the subsidy 
  The life of the certificate is fifteen (15) years, but this may be renewed for a further fifteen (15) years if necessary.     9. Statistical data on the impact of the programme 
  Please see response at section 7 above.    10. Information referred to in Paragraph 2( a) of the General Council Decision of 2007 
 
 All beneficiaries under the Acts have been notified individually in writing and in gazetted 
instruments that the programmes will not conti nue beyond 31 December 2015 as set out in the 
General Council Decision. Beneficiaries were notifie d in April 2008 in a letter from the Ministry of 
Industry, Investment and Commerce (MIIC). New bene ficiaries after this date have been similarly 
notified in the Ministerial Orders issued to them under the signature of the Minister of Industry, Investment and Commerce. 
 
As mentioned in previous updating no tifications in G/SCM/N/192/JAM and 
G/SCM/N/211/JAM, work on meeting Jamaica’s oblig ation to make the four (4) programmes covered 
by this notification WTO compatible by 31 Decemb er 2015 is being conducted as part of Jamaica's 
Tax Reform Programme the main objectives of which are, inter alia , the simplification and 
improvement of Jamaica's tax system and overhauling existing incentives programmes. 
 
Work under the Tax Reform Program me intensified in 2011 with th e tabling in Parliament of 
a Green Paper on Tax Reform outlining the scope of the tax reform measures,  including the creation 
of an omnibus tax incentives legislation dealing with  the granting of tax concessions and waivers. The 
Ministry  of Industry, Investment and Commer ce (MIIC) submitted proposals to the Tax Reform 
Committee, the committee considering proposals on comprehensive tax reform, on the possible 
principles and scope of the proposed omnibus incentives legislation, the Industry Incentive and Facilitation Act, which will repeal the 4 pieces of legi slation covered by this notification.  MIIC has 
proposed that the new incentives legislation should be  general in scope with priority given to sectors 
of importance to the Jamaican economy, including agro-processing, light manufacturing and 
information and communications technology.  The new regime should be simple in application; 
should be time-bound as the incentives should only be  granted for a specific timeframe; and should 
not be contingent on export performance.  
Consultations continued during the reporting period with stakeholders who indicated 
agreement in principle with the reform di rection proposed for the new incentives regime. 
 
 The reform programme will be initiated during the current fiscal year 2012/2013 when it is 
also expected that the legi slative process will commence. 
  
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