DaviesAS OF April 1, the income tax on dividends paid by companies listed on the Jamaica Stock Exchange (JSE) will be eliminated.
Removal of the tax is the final phase of a policy decision outlined by Finance and Planning Minister Dr. Omar Davies two years ago, but the move is likely to rekindle calls from the private sector for it to be extended to the island's smaller, unlisted companies.
The Tax Administration Services Department (TASD), in a release this week, said that effective April 1, the income tax payable on dividend by a company listed on the JSE will be zero.
Income tax on dividends was phased out over three years, starting on June 1, 2000 when the rate was reduced to 20 per cent. However, tax payable on dividend income received from companies not listed on the JSE remains at 25 per cent by individuals, and 33.3 per cent in the case of payments to companies and other individuals.
When he made the announcement during his budget presentation in 2000, Dr. Davies said the motivation for the phasing out of the income tax for listed companies was the hope that it would further stimulate the domestic capital market and encourage wider citizen participation in those companies.
However, since then, various public sector leaders have argued that it was discriminatory not to extend the measure to those companies which were not listed on the Stock Exchange. They suggested that the Government's tax break favoured large companies and was discriminatory against small companies.
