Jamaica has made significant progress in building its transfer pricing capacity, including by generating nearly $8 billion in revenues and upskilling its tax officials, according to an OECD report published yesterday, April 8.
According to the report, titled A decade of tax capacity building in Jamaica, the country successfully put in place new TP legislation in 2015 in line with international standards, despite “initial pushback” from Jamaica’s business community.
As part of the OECD’s collaboration with Jamaica, training was also provided for more than 70 Jamaican tax administration officials. This has led to increased staff expertise and confidence in applying new TP rules, including conducting audits and engaging with multinationals in negotiations, the report said.
It has also led to better audit procedures as well as enhanced writing and oral communication skills, the report added.
The report also claimed that governance has improved, citing the creation of two specialised TP teams in the country’s Large Taxpayer Office.
Also cited was the appointment of TP “technical specialists” to support auditors who encountered TP issues.
Tax compliance has increased in the years since Jamaica first enacted its TP regime in 2015, the OECD also noted.
This resulted in an uptick of TP returns being filed, from 25 taxpayers in 2015 to 240 in 2016, the report found.
This increased to more than 900 TP returns in 2022/23.
According to the report, these returns have enabled Tax Administration Jamaica to prioritise risks and identify whether they relate to cross-border or domestic transactions and whether they are loan transactions or deductions.
Jamaica has also seen an increase in the number of transactions disclosed, from 30 in 2015 to 2639 in 2016.
This number reached more than 4,000 in 2022/23, representing a total value of €6.6 billion ($7.7 billion).
Jamaica has also seen increased tax revenue from Tax Inspectors Without Borders (TIWB) programmes, covering 11 audit cases and involving nine taxpayers.
These have led to assessments of more than $23 million in additional tax, the report stated.
TIWB is a joint initiative of the OECD and the United Nations Development Programme, which was launched in 2015. It seeks to help developing countries improve tax audit capacities by pairing tax experts with local officials to address international tax issues, TP and audits.
The report also claimed that Jamaica, over the past decade, has advanced numerous tax reforms thanks to strong political ownership and a strategic partnership with the OECD, as well as other partners.
A clear reform agenda, consistent leadership from successive finance ministers and active stakeholder engagement have all been instrumental in overcoming resistance to the new TP regime, the report added.
“This partnership has enhanced Jamaica’s capacity to participate in international tax standard-setting and has also improved the OECD’s understanding of the challenges faced by developing economies in general, and the Caribbean islands in particular,” the report said.
Jamaica has demonstrated its commitment to acting as a regional leader on international tax matters, the report added.
Ainsley Powell, the commissioner general of Tax Administration Jamaica, said: “Tax Administration Jamaica, in collaboration with the OECD, has built a very strong foundation in managing international tax risks.
“We will continue on that path in order to achieve optimal tax compliance.”
