House postpones vote on transfer pricing bill
THE House of Representatives on Tuesday postponed its vote on the Income Tax (Amendment) (No 2) Act, 2015, which includes provisions for the introduction of transfer pricing rules in Jamaica.
Minister of Finance and Planning Dr Peter Phillips agreed to postpone taking a vote on the Bill, also referred to as Transfer Pricing Rules bill, after a number of objections were raised by the Opposition’s spokesman on finance and planning, Audley Shaw.
Among Shaw’s key objections were that: the provisions substantially increase the burden on compliant taxpayers; it could lead to Jamaica’s ranking in the world’s ease of compliance for taxpayers sliding; there is a lack of clarity in the rules included in the bill; and that it could affect foreign direct investments flowing into Jamaica.
He said that the legislation has been lying around long enough, so that it could easily have accommodated a process of due diligence and traditional consultation before being debated.
“Sometimes to get greater compliance, what you need is greater understanding,” he told the House.
“In the absence of a parliamentary review of the legislation, I recommend that the honourable minister does not seek to use the power of his majority to pass this Bill today,” Shaw suggested.
Dr Phillips responded that the purpose of the Bill was to ensure that having benefited from the expenditures of the Jamaican taxpayer, companies headquartered in Jamaica should ensure that a fair share of the wealth earned locally is returned to the country, in accordance with its laws.
He said that the legislative amendment does not break new ground in relation to the concept of transfer pricing, which is already provided for in the Income Tax Act. It also does not break new ground in relation to the arm’s length principle, that is also already provided for in the legislation.
He said that the effect of the legislation is that transactions between connected companies or business organisations, including companies with common shareholders, will be more closely scrutinised
However, he agreed to the suspension of the debate, “to give the Opposition a chance to reflect on the amendments”.
