Bringing offshore business to the island
JAMAICA may soon become a one-stop destination for sun, sand and international financial services. Although not the typical trilogy, this type of diversification could be beneficial for an economy that is in dire need of resuscitation. Indeed, the Government has expressed its commitment to creating an International Financial Services Centre ("IFSC") in Jamaica as a means of diversifying the economic base and stimulating economic growth. However, if Jamaica is going to be both "fun in the sun" and "ready for business", we will need a raft of new laws to bring investors to these unchartered waters.
To date, the only piece of legislation that has been passed in support of the IFSC is the Jamaica International Financial Services Act ("the Act"). The object of this Act is to foster the development of an international financial services sector in Jamaica that meets international standards of supervision and regulation. Under the Act, international financial services are defined as including "any business activity consisting of the formation or manage-ment of international business companies; the formation and management of offshore trusts; offshore banking; international insurance; international asset protection and manage-ment and international
Given the scope and sophistication of these services, the development of a compliant IFSC in Jamaica seems to be a tall order for what some might call a modest Act. The Act creates the International Financial Services Authority whose mandate includes marketing Jamaica as a low-tax centre for international financial services and
making recommendations, where necessary, for legislative changes relating to international financial services. In performing these functions, the Authority may, among other things, conduct seminars, provide training programmes, conduct research, and disseminate information.
While this Act is an important first step, other pieces of legislation will be needed, and in fact are being contemplated, to support the suite of services offered by the IFSC. One such piece of legislation is the proposed Holding Company and International Business Company Bill. This type of legislation is a typical feature of jurisdictions such as St Lucia and the Cayman Islands that are key players in the offshore industry. It often provides for incentives such as confidentiality of the identity of shareholders, tax concessions and less onerous regulatory requirements in terms of statutory filings and fees. Other pieces of legislation that have come up on the Government's legislative programme include the General and Limited Partnership Bill, the Insolvency Bill, the Trusts and Corporate Services Providers Bill, and
the Trusts Bill.
With this impressive agenda, the Government should perhaps be commended and cautioned in the same breath. In creating the legislative landscape for an IFSC, the Government will have to be mindful of the risks associated with the offshore industry and of its obligations under information sharing regimes, such as that created by the United States Foreign Account Tax Compliance Act. We will have to find a way to strike a balance between building our reputation as an IFSC and protecting our shores from the activities of tax evaders and money launderers.
Only then will we be truly "ready for business".
Malene Alleyne is an Associate at Myers, Fletcher & Gordon and is a member of the firm's Commercial Department. Malene may be contacted via firstname.lastname@example.org or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice