TECH experts are cautiously supporting the Government’s plan to tax imported digital services, saying the move corrects long-standing tax imbalances but warning that careful design and reinvestment will be critical to avoid slowing digital adoption.

Finance Minister Fayval Williams recently announced that the Government intends to apply General Consumption Tax (GCT) to digital services and intangible products supplied from overseas and consumed locally, extending Jamaica’s tax system into cross-border digital consumption, an area that has historically operated outside domestic taxation. The measure also addresses what industry players describe as a structural gap between taxed local providers and untaxed foreign competitors.

“When you have a competitor selling a service from overseas, they don’t get taxed. So at first there is trepidation — more taxes — but then you pause and say, ‘Hold on.’ This is actually levelling the playing field,” said Christopher Reckord, AI advisor and IT services firm tTech Limited.

Reckord noted that Jamaican digital service firms already incur GCT on local inputs and labour, while foreign platforms supplying the same services into Jamaica have historically operated outside the local tax framework. Applying GCT to imported digital services closes that gap and aligns Jamaica with more than 100 countries that already tax cross-border digital consumption. He added that the policy’s timing also reflects Jamaica’s fiscal reality following Hurricane Melissa.

“Considering the situation with Melissa and one of the ways to fund recovery, I am in agreement with it in that way,” he told the Jamaica Observer. “If it were introduced without Melissa as a trigger, I would have paused and asked more questions.”

The digital tax also represents a broader structural policy shift for other industry players, signalling that Jamaica now recognises the digital economy as a central and taxable component of economic activity.

“This move sends an important signal: Jamaica recognises that the digital economy is no longer emerging; it’s central and needs modern policy,” expressed Dushyant Savadia, founder and chief executive of Amber Group.

However, they also say the shift will introduce real cost effects across the business landscape, particularly for firms dependent on imported software subscriptions and cloud platforms.

“In the short term, this increases costs,” Savadia told the BusinessWeek. “For a small business spending US$800 to US$1,000 a month on digital tools, that’s an extra US$1,500 to US$2,000 a year.”

Large companies registered for GCT may offset some of this through input tax credits — the mechanism that allows businesses to reclaim tax paid on operational inputs — but smaller firms and early-stage digital adopters are less able to absorb or recover those costs. That risk is a central concern for Mohan Beckford, chief vision officer of digital transformation firm Next Step Digital Solutions, which works with micro-, small- and medium-sized enterprises (MSMEs) to adopt digital tools. He said those pressures are likely to be most pronounced among businesses still in earlier stages of digitisation. He noted that while the objective of fairness is valid, the real-world impact of applying GCT to digital services must be carefully considered, especially in an economy where digital transformation is still unfolding. Many start-ups are using tools such as cloud software, accounting platforms, e-commerce systems and online marketing services that form core operational infrastructure for their businesses.

“If the cost of digital tools increases due to GCT on overseas services, many MSMEs will respond by delaying adoption, reducing digital marketing spend, or cutting back on essential systems,” Beckford said.

Across the technology sector, however, there is broad agreement that applying GCT to imported digital services reflects global practice and addresses a structural gap in Jamaica’s tax system. The emerging debate instead centres on timing and calibration, on whether the policy can be implemented in a way that preserves fairness while avoiding friction for businesses still moving online.

“Jamaica faces real fiscal realities. We’ve absorbed massive shocks — hurricanes, global inflation, infrastructure rebuilding, and debt servicing. Revenue has to come from somewhere, and digital taxation is now a global standard,” said Savadia.

Savadia added that several policy principles would help ensure the tax strengthens rather than burdens the local digital economy, including fast and simple input tax credits for business software, reinvesting a portion of digital tax revenues into technology research and startups, temporary relief for early-stage tech firms, and protecting education and skills platforms from added costs. He also urged regular policy review with industry participation, all of which can turn taxation into a growth driver rather than a drag on competitiveness.

“The goal isn’t to collect GCT forever. The goal is to build an economy where Jamaican digital exports generate far more than the tax ever could,” Savadia told the BusinessWeek.

Beckford similarly stressed that the conversation should centre on policy design rather than opposition to taxation itself.

“This conversation should not be framed as being for or against taxation. It should be about how Jamaica applies GCT without unintentionally slowing the transformation the economy needs,” he added.

While the Government has announced its intention to tax imported digital services, detailed implementation rules have not yet been released. Industry participants expect the measure to apply to commonly used overseas digital services such as streaming platforms, cloud storage, software subscriptions, online advertising and business applications, though the final scope and collection mechanisms are still to be clarified by the Ministry of Finance and Tax Administration Jamaica. Even with those details pending, the policy is widely viewed as Jamaica’s first formal step into taxing cross-border digital consumption, a shift that experts say both normalises the country’s digital tax framework and reshapes the cost landscape for businesses and consumers increasingly operating online.

BECKFORD…if the cost of digital tools increases due to GCT on overseas services, many MSMEs will respond by delaying adoption, reducing digital marketing spend, or cutting back on essential systems.

SAVADIA…the goal isn’t to collect GCT forever. The goal is to build an economy where Jamaican digital exports generate far more than the tax ever could.

RECKORD… considering the situation with [Hurricane] Melissa and one of the ways to fund recovery, I am in agreement with it in that way. If it were introduced without Melissa as a trigger, I would have paused and asked more questions.