Government Withdraws Withdrawal Levy

Following widespread public outcry, the government has withdrawn the controversial levy on deposit taking institutions and encashments from securities dealers. This was replaced by two new measures which are expected to raise $2.3Bn.

The first measure is a withholding tax on insurance premiums paid to non- residents by Jamaican residents and the modification of the General Consumption Tax (GCT) Act relating to imported services. There will be a 15% withholding tax on all insurance premiums paid by Jamaican residents to non- residents. Premiums paid to non- residents by registered Jamaican insurance companies will be exempt.

The second measure, the modification to the GCT Act to include imported services, is aimed at leveling the playing field for resident and non-resident service providers. Currently, only local service providers are subject to taxes. The Minister noted that the move is designed to stem future revenue losses from this source, as purchasing services supplied offshore is becoming increasingly common.

The government also withdrew the proposed increase in premium tax for regionalized and non- regionalized life assurance companies and the increase in investment tax (to 20%) for insurance companies. Instead, Asset Tax paid by insurance companies will be increased to 1% (from 0.25%). This will be implemented for one year and is expected to yield $900Mn.