STATE minister in the Ministry of Industry, Investment and Commerce, Norman Dunn, has underscored that Jamaica will not condone the existence of shell companies in the country’s special economic zones (SEZs).

Now passed in both Houses of Parliament, the Special Economic Zones (Amendment) Act, 2022 will safeguard Jamaica’s conformity to international standards of tax transparency and provide for more efficient administration of operations in the zones.

In February 2020, Jamaica was grey-listed by the Financial Action Task Force (FAFT) for failing to address some of the deficiencies identified in the 2017 Caribbean Financial Action Task Force (CFATF) Mutual Evaluation Report (MER) on anti-money laundering and counter-terrorist financing measures.

Among the discussed weak links was the island’s susceptibility to unknowingly permit shell companies to set up operations in the country among other matters.

Having entered an observation period, the Government developed a FAFT action plan which includes developing a broader understanding of its money laundering/terrorist financing risk and including all financial institutions and designated non-financial businesses and professions in the AML/CFT regime and ensuring adequate risk-based supervision in all sectors.

Jamaica has made progress in addressing the deficiencies and was re-rated on 13 recommendations and will remain in enhanced follow-up and report to CFATF on progress to improve AML/CFT measures.

Of note, Jamaica’s SEZ regime was introduced to remedy some of the existing tax related occurrences which were slipping through the crack.

Dunn noted that the amended Act will prevent profit shifting and ensure that SEZ companies satisfy the requirements, including providing employment opportunities for qualified Jamaicans within the zone and along the supply chain.

On the matter of intellectual property activities in the SEZs, the state minister noted that since there are no provisions at this time to govern them, those activities are now excluded from the zones, as there is increased potential for harm.

However, he pointed out that no existing SEZ will be negatively impacted by this exclusion since none is currently engaged in those activities.

The state minister explained, “If any such entity is identified, we have made provisions in the amended legislation to allow them to continue to carry out these activities until March 31, 2023.”

The Government has indicated it will seek to create a legislative framework to govern intellectual property activities in the SEZs by March 2023.

Jamaica’s SEZs fall under the management of the Jamaica Special Economic Zone Authority (JSEZA), an agency of the Ministry of Industry, Investment and Commerce.

As of October 4, 2022, there were 167 entities operating in SEZs in Jamaica.