Facing criticism over her earlier justification of a digital services tax, Finance Minister Fayval Williams has moved to clear up mounting confusion over the Government’s proposed measure, insisting that online purchases of physical goods will not be affected.

She also warned that gaps in existing policies are allowing revenue to slip through the system and placing local businesses at a disadvantage.

Closing the 2026/27 Budget Debate in the House of Representatives on Tuesday, Williams sought to directly address concerns raised in the days following her opening presentation, particularly arguments from Opposition spokesman on finance Julian Robinson that the policy appeared to contradict earlier moves to make online shopping cheaper.

Central to her clarification was a detailed breakdown of how Jamaica categorises digital trade, which she said is critical to understanding what the tax will apply to.

Williams explained that digital trade is now classified in three ways: goods or services that are digitally ordered and digitally delivered, those that are digitally ordered and physically delivered, and those that are physically ordered but digitally delivered.

She stressed that the proposed tax is targeted only at services that are both supplied and consumed digitally across borders, and not at goods purchased online and shipped into Jamaica.

“Definition number two [for the term digital trade], digitally ordered and physically delivered, are goods that come into Jamaica through our ports and are already subject to taxes and duties…these will not be subject to any further taxes and duties as a result of the revenue measures. Let me say it clearly, digitally ordered and physically delivered trade was not included in our revenue measures,” Williams told the House.

She explained that for statistical and measurement purposes, all three categories of digital trade are included when measuring the size of Jamaica’s digital economy, noting that the overall digital sector is broader than the portion that will actually be subject to the new revenue measures.

In the meantime, Williams argued that this segment of the economy has grown rapidly, outpacing the ability of existing tax rules to capture value and creating what she described as an imbalance between foreign providers and local businesses.

“As the global economy becomes increasingly digital, countries must adapt how they understand and respond to new forms of economic activity. Services already account for a substantial share of Jamaica’s GDP (gross domestic product), and an increasing portion of this activity is taking place through digital and cross-border channels. This is not simply a matter of getting revenues, but of ensuring that our economic systems are properly equipped to understand these developments. We are, therefore, strengthening our capacity to better measure and interpret digital [and] economic activity so that our policies remain fair, balanced, and grounded in accurate information,” she said.

Her explanation comes amid sustained criticism from the Opposition, which has questioned both the logic and consistency of the policy. Robinson had argued that introducing a new tax linked to online activity appears to run counter to the Government’s earlier decision to raise the de minimis threshold to US$100 which was intended to reduce the cost of online shopping for consumers.

However, Williams acknowledged that the policy has been exploited by many consumers and importers.

“When the de minimis threshold was increased from US$50 to US$100, it was not expected that we would see splitting up of orders to avoid the taxes and duties. By splitting up, I mean the instances in which if you are ordering from the same vendor, instead of making one order, you make multiple orders,” Williams explained.

“Take a scenario in which you are ordering two items and they cost US$100 each, that’s a total of US$200. Packaged and shipped in one package of US$200, there would be tax on the CIF (cost, insurance and freight). Instead, what we are seeing is a splitting of the orders to fall within the US$100 de minimis allotment and an increase in the number of US$100 and under-valued packages,” she added.

She said the practice of dividing shipments to remain under the threshold has become widespread, effectively allowing goods to enter the country without contributing to Government revenue.

“The unforeseen consequence is that no revenues flow to the treasury…this is quite regrettable and was simply not the intent of the de minimis policy,” Williams said.

According to the minister, this has not only reduced revenue flows but has also intensified pressure on domestic retailers, who must compete with goods entering the market without equivalent tax treatment.

She argued that the digital services tax must, therefore, be viewed as part of a broader effort to modernise Jamaica’s tax framework, ensuring that both physical and digital economic activity are treated more equitably.

Williams maintained that the Government is not seeking to discourage online shopping or restrict access to overseas services, but rather to close gaps that have emerged as consumption patterns shift.

Finance Minister Fayval Williams says the proposed tax is targeted only at services that are both supplied and consumed digitally across borders, and not at goods purchased online and shipped into Jamaica.