WORLD TRADE  
ORGANIZATION  G/SCM/N/160/JAM 
3 July 2007 
 (07-2843) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
 
Extension Under SCM Article 27.4 of the Transition Period for the  
Elimination of Export Subsidies Pursuant to the Procedures  
in Document G/SCM/39  
  
JAMAICA 
 
  The following communication, dated 1 July 2007,  is being circulated at the request of the 
Delegation of Jamaica.  
_______________ 
 
 Pursuant to the Procedures contained in doc ument G/SCM/39 for extension under Article 27.4 
of the Agreement on Subsidies and Countervaili ng Measures of the transition period for the 
elimination of export subsidies, and the decisi ons taken by the SCM Committee in November 2002, 
November 2003, November 2004, October 2005 and October 2006 to approve the requests made by 
Jamaica contained in documents G/SCM/75-80 a nd Addenda, Jamaica hereby submits the following 
updating notification for 2006 to enable the Committ ee to conduct its annual review of compliance of 
the standstill and transparency requiremen ts as under the decision in G/SCM/39.   
 G/SCM/N/160/JAM 
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  A. EXPORT
 INDUSTRY  ENCOURAGEMENT  ACT 
1. Description of the Programme  
  The Export Industry Encouragement Act was esta blished as an incentive framework geared to 
the encouragement of export industries.   
 
2. Period Covered by Notification
 
  Programme description as at 1 September 2006.    
3. Policy Objective and/or Purpose of the Subsidy
 
  The objective is to encourage investment and 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 
 
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 dut y 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 in 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
 
  No statistical information is available that reflects the amount of the subsidy per unit.  
Revenue foregone is negligible as there ar e few beneficiaries under the programme.    G/SCM/N/160/JAM 
 Page 3 
 
 
  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, leathe r, plastics).  Although its impact is not as 
dramatic as in earlier years, continuation of the Programme can still yield significant economic 
benefits.   
 
B. JAMAICA
 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 as at 1 September 2006.    
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 for 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, consum er goods, raw materials or articles for use 
in connection with the approved product;   
 
- duty free treatment of articles for the constructi on, alteration, and repa ir of equipment of 
premises in the Free Zones;   
 
- total relief from income tax in respect of prof its or gains earned from approved activities;   
 
- repatriation of profits (since liberalization of the foreign exchange market in 1991 there 
are no restrictions on the repatriation of profit);   
 
- exemption from the normal fees payable with respect to work permits.   
   G/SCM/N/160/JAM 
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  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 
 
- transhipment operations 
 
- loading and unloading operations 
 
- exporting 
 
- importing 
 
- service operations, including banking, data pr ocessing 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 into the local market are subject to 
the applicable duties and charges.   
 
7. Subsidy Per Unit
 
  No statistical information is available that re flects the amount of subsidy per unit.  However, a 
comprehensive study on tax incentives carried out in May 2004 determined that tax loss in respect of 
overall fiscal incentives for 2003 was J$1.5B.   
 8. Duration of the Subsidy
 
 Incentives granted to Free Zone entiti es are for an indefinite period. 
 
9. Statistical Data on the Impact of the Programme
 
  The Free Zone regime has facilitated investme nt (foreign and local) in traditional as well as 
new areas of businesses and has provided employme nt and economic opportunities for a number of 
persons.  Exports from the Free Zones in 2006 was US$21.3m and employment was provided for 
5,600 persons.   
    G/SCM/N/160/JAM 
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  C. INDUSTRIAL  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 Notification
 
  Programme description as at 1 September 2006.    3. Policy objective and 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 Incentiv es (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 years 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 Mini ster of Industry to construct factories.  
Approved builders providing factory space for compan ies 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.   
 
7. Subsidy Per Unit  
  No statistical information is available that reflects the amount of the subsidy per unit.  
Revenue foregone is negligible as there ar e few beneficiaries under the programme.   
 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
 
 
 Information on the trade effect of the subsidy is not available.  G/SCM/N/160/JAM 
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  D. FOREIGN
 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 as at 1 September 2006.    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 for 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 Inco me Tax on their foreign trade income as 
long as they remain designated.   
 
- No income tax is imposed in Jamaica on divi dends paid to foreign shareholders by a 
designated FSC.   
 
- Investment income or carrying changes earned by an FSC are relieved from income tax.   
 
- 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 which locate in Jamaica.  Very generous incentives as outlined above are available to FSCs.   
 
7. Subsidy per unit
 
  No statistical information is available that reflects the amount of the subsidy per unit.  
Revenue foregone is negligible as there are few beneficiaries under the programme. 
 8. Duration of a 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
 
 
 Information on the trade effect of the subsidy is not available.    
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