Jamaica eyes IFSC status as the world watches

It is claimed that the Caribbean offers the most popular tax havens or international finance service centres (IFSC’s) in the world, providing benefits such as very low tax liability and financial privacy. Counted among these are The Bahamas, Panama, and the Cayman Islands.

Caribbean countries which offer such financial services are meanwhile trying to escape blacklisting or the reputation of being countries where corrupt individuals and tax cheats hide their money. The Pandora and Panama Papers, published recently, have left regional IFC’s squirming.

Jamaica, meanwhile, is maintaining hope of becoming an established IFSC, minus the bad reputation.

Previously, Don Wehby, CEO of GraceKennedy Limited, once also a minister without portfolio in the Ministry of Finance and the Public Service, proposed that transforming Jamaica into an IFSC would promote growth and result in job creation, increased government revenue, real estate development, diversification of Jamaica’s economic base, and enhance Jamaica’s presence in the international finance market.

Beautiful countries such as Bermuda are among the most popular low-tax jurisdictions in the world, and have come under scrutiny, although European international financial centres hold far more assets..

The Jamaica International Financial Services Authority (JIFSA) was created to lead efforts to finalise a legislative framework geared at positioning Jamaica as an IFSC.

Investopedia lists the top 10 tax havens in the Caribbean, starting out with the Cayman Islands. Offshore companies are not taxed on income earned abroad, and there is no taxation of Cayman international business companies (IBCs). The Cayman Islands has no income tax, no corporate tax, no estate, or inheritance tax, and no gift tax or capital gains tax, making it a pure tax haven.

The Caymans Islands has very strict banking laws designed to protect banking privacy. Offshore corporations in the Caymans are not required to submit financial reports to any Cayman government authority. Incorporation in the Cayman Islands is a very simple, streamlined process.

There are no exchange controls in Cayman restricting money transfers in any way. Offshore businesses are not required to pay stamp duty on asset transfers. How do IFSCs benefit from services offered? As outlined at corporate finance, while they charge a lower tax rate than other countries, they also charge high customs or import duties to cover the losses in tax revenues.

The centres may charge a fee for new registration of companies and renewal charges to be paid every year. Additional fees may also be charged such as licence fees. Such fees and charges would add up to a recurring fixed income. Finally, by attracting foreign individuals or businesses, the country may earn substantially more in tax revenues than if these companies were missing, also benefiting from corporate investments in business operations that offer jobs.

Jamaica and the competition

As noted on its website, the Jamaica International Financial Services Authority (JIFSA) was established by statute in 2011 to market and promote Jamaica as a jurisdiction for international financial and business services.

JIFSA aims to encourage multinationals to establish entities in Jamaica which will provide financial and business services to the export market and own assets in other jurisdictions.

JIFSA boasts, “Efforts have included creating a robust and sophisticated legislative framework, formulating a competitive tax regime, and taking steps to ensure that the domestic market, relevant institutions and agencies are fully prepared to ensure the centre operates efficiently, takes advantage of the ensuing opportunities and that the jurisdiction remains transparent.”

Dr Wayne Robinson, senior deputy governor of the Bank of Jamaica (BOJ), says the work which continues to position Jamaica as an IFSC is a commendable effort, noting, “Overall, BOJ welcomes efforts to position Jamaica as a global financial services centre especially since it presents opportunities to further deepen the capital market and can also facilitate the financial sector being positioned to be a net foreign exchange earner.”

Dr Wayne Robinson, senior deputy governor of the Bank of Jamaica, says the work which continues to position Jamaica as an international financial service centre is a commendable effort, but advises caution..

Dr Robinson asserts, “Jamaica can be competitive in global financial services given (i) Jamaica’s a stable macroeconomic environment and sound financial sector; (ii) banks with international presence and reputation; and (iii) a talent pool in legal and financial services; and (iv) a good telecommunication platform.”

He adds, “From Bank of Jamaica’s standpoint, our collaborative work to further deepen capital markets through ecosystem and regulatory reforms does create synergies with JIFSA’s efforts. This will enable Jamaica to be an even more important regional centre to both structure and raise capital. Synergies also exist with the Special Economic Zones and business processing capacities being developed, both of which support and are aligned with Jamaica’s near shore logistical capabilities.”

JIFSA said it has been spearheading Jamaica’s efforts and is focused on ensuring that the country’s industry is developed on par with established centres and maintains strict adherence to international regulations and standards globally.

JIFSA has been instrumental in creating the legislative framework that will ensure that Jamaica has modernised business legislation. JIFSA also endeavours to continuously monitor and update legislation as needed to ensure that Jamaica’s infrastructure quickly responds to emerging trends in the global market.

Chairman of JIFSA, Eric Crawford, said in previous publications that Jamaica remains committed to establishing an IFSC aimed at transforming the country into an offshore financial hub, similar to jurisdictions such as Bermuda and the British Virgin Islands (BVI).

Jamaica is expected to benefit significantly from the establishment of an IFSC. International companies may seek to re-domicile to Jamaica, this will generate employment opportunities, with workers gaining valuable international experience while earning high salaries.

Enabling legislation

Enabling legislation passed to support IFSC in Jamaica include the International Corporate and Trust Services Providers Act, The Partnership (General) Act, and The Partnership (Limited) Act.

The International Corporate and Trust Services Providers Act will establish a legislative framework that will allow such service providers to operate in an international business environment.

The General Partnership Act formalises the process for foreign partnerships pursuing business transactions in Jamaica and facilitates mergers and conversion of such arrangements, while the Limited Partnership Act aims to accommodate commercial activities not suitable for other categories of business in Jamaica.

The Limited Liability Companies Bill is awaiting the approval of Parliament while the Segregated Accounts Companies Bill is in draft phase.

Government officials say that the development of a successful regime is an ongoing process and will require continuous input and cooperation from both the public and private sectors.

In a previous response to the Jamaica Observer in June, JIFSA said it was targeting the end of 2022 for roll out of an IFSC regime. The authority admitted that the regulatory framework will still need further updating to meet other international standards.

So far, the regulatory body has been instrumental in the passing of four laws to enhance Jamaica’s favourability as an IFSC — Partnership (General) Act, Partnership (Limited) Act, The Trusts Act, and The Trust and Corporate Services Provider Act.

The Limited Liability Companies Bill is now awaiting the approval of Parliament while the Segregated Accounts Companies Bill was in the draft phase. The latter offers to protect parent and/or holding companies from assuming the debt of their subsidiary operations.

JIFSA highlighted that the passage of the two legislations will facilitate the “next phase of marketing the jurisdiction as a financial services centre”.

JIFSA is meanhwile eyeing Trinidad and Tobago, which is also ushering in plans to obtain IFSC status as it pushes the remaining Bills through Parliament.


The BOJ cautions that transparency requirements and global standards must be adhered to. According to Deputy Governor Wayne Robinson, “As the country positions itself as a global financial centre, work must continue to ensure that Jamaica adheres to the international standards and best practices in relation to anti-money laundering & counter-financing of terrorism and proliferation (AML/CFT/CFP). Importantly, Jamaica must ensure that its AML/CFT/CFP framework prevents legal persons and arrangements from being misused and that the regime for beneficial ownership information is in line with international standards by ensuring that the regime for beneficial ownership information, that is, its collection, verification, and timely availability to competent authorities and other relevant persons, is in line with international standards.” claims that eight jurisdictions in the Caribbean were responsible for almost one-third of all tax revenues lost in the world, due to evasion.

The data source claims, “Collectively, all the countries and territories, included in this graph, accounted for 33.1 per cent of the total tax revenue loss caused by offshore wealth relocation, according to 2021 estimates. Thanks to a legal and financial system that enables tax avoidance and evasion, the Cayman Islands had the largest share of tax revenue loss inflicted on other countries in the world, at 26.6 per cent.” states that Apple has US$214.9 billion booked offshore in Ireland as a tax haven. Apple would have owed the US Government US$65.4 billion in taxes if tax haven benefits were not used.

Nike, meanwhile, holds US$10.7 billion offshore, using Bermuda as a tax haven. It is estimated Nike would have paid US$3.6 billion for taxes if tax haven benefits were not used. This implies that Nike pays a mere 1.4 per cent tax rate to foreign governments on those offshore profits.

While Jamaica stays fixed on establishing an IFSC industry, the eyes of the world are watching.

AVIA USTANNY COLLINDER Senior business reporter

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