By Debbie-Ann Gordon, ContributorANY RECENT tour of the Caribbean would buttress the view that of the Caribbean countries, Jamaica is favourably suited for the creation and success of an offshore industry, if only by reason of its infrastructural development compared to many offshore centres.
Further, Jamaica's connectivity to the world, and its proximity to the United States via air and the frequency of daily flights affords it a competitive edge over most other Caribbean territories.
Having invested heavily in its technological infrastructure and being the earliest of the Caribbean territories to liberalise the telecommunications sector thereby lowering costs through competition, Jamaica is arguably unparalleled in the Caribbean in this regard.
Jamaica provides telecommunications services that are on par with those found in the U.S. and other major markets. Facsimile machines, direct dialling and advanced telecommunications systems, including Internet access are part of everyday business life, putting the island in instant touch with the world.
This engenders quick exchange of goods, capital, information and ideas and affords a certain level of ease and comfort for business.
Jamaica has a strong infrastructure of professional service providers such as lawyers, auditors, accountants and financial analysts, to assist with company formation and management, trusts and a broad array of other financial services providers when compared to other countries in the region. This adds competitive efficiency and affordability given the availability of local professional help.
SOUND FINANCIAL
ENVIRONMENT
Unlike Barbados and other islands, Jamaica has no exchange control restrictions.
Further, Jamaica has been courting and is now realising the fruits of a sound financial regulatory environment.
The Bank of Jamaica recently introduced more stringent capital adequacy requirements for banks and financial institutions, intended to ensure adequate levels of capital to cushion against losses.
The Financial Services Commission (FSC) which came into existence in 2001 by virtue of the FSC Act, is responsible for the administration of the securities, insurance and pension laws which is bolstered by the recent passage of the Companies Act which will facilitate ease of incorporation and a high degree of flexibility.
For example, there is now allowance for companies to reduce their share capital when it is surplus to their ongoing requirements. There is also an existing tax treaty network to avert double taxation (though in dire need of update and expansion). Not to be underestimated, is the integrity of the Jamaican judicial system.
CAYMAN ISLANDS
This dot in the Caribbean has, since its breakaway from Jamaica, tailored itself for foreign investment and is today the world's fifth largest financial centre, trailing behind New York, London and Hong Kong.
Estimates reveal that one third of the world's wealth surges through Cayman. It is host to more than 600 banks, approximately 60,000 corporations, over half a trillion United States dollars in deposits, over 2,200 mutual funds and 16,000 closed-end funds.
More recently, Cayman has endeavoured to remove any tarnish from its reputation by enacting a criminal assistance treaty with the U.S., implemented regulations and code of ethics for those representing foreign companies, a tax information exchange agreement, a monetary authority to oversee the financial industry and has introduced four laws relating to anti-money-laundering.
ST. LUCIA
St. Lucia is the latest Caribbean entrant to the offshore world and its entry has been heralded with seven pieces of legislation (and growing) designed to make the jurisdiction a modern centre for international financial services.
One of the pillars of the industry is the IBC Act, which offers a host of competitive advantages.
For example, an IBC may or may not elect to pay income tax based on its specific requirements.
Perhaps the most innovative aspect of St. Lucia's international financial centre is the online IBC registry being the world's only public online registry, which facilitates ease of incorporation and communication, while affording security and privacy to the company.
IRELAND
For some 50 years, successive Irish governments have encouraged foreign investment through tax incentives.
As a consequence, Ireland is now established as one of the world's most important offshore centres, having steadily implemented tax measures over time, to attract inward investment.
In 1987, it included in financial services a list of qualifying activities that would suffer taxation at a preferential rate.
However, with the advent of global tax competition and in an effort to preserve its image as a favourable tax jurisdiction, in 2003, Ireland reduced its corporate tax to a flat rate of 12.5 per cent.
This new regime as opposed to the old (which was only available to qualifying industries) is now available to practically all active sectors of business once it is satisfied that the activity conducted in Ireland comprises of the carrying on of a trade in Ireland for tax purposes.
CAPITALISING ON ADVANTAGES
The fact is, in present day, 'offshore' simply means anywhere but home.
Relying on the dominant and matchless characteristics that Jamaica possesses and in acknowledging the importance of tax incentives to foreign investment, it remains for our policy makers to capitalise on these features and chart the evolution of an offshore industry for Jamaica.
Debbie-Ann Gordon is a tax counsel.
