On January 1, 2013 Tax Administration Jamaica (TAJ) began enforcing the requirement for all foreign residents that transacted business with a tax authority in Jamaica to have a Taxpayer Registration Number (TRN) issued by the TAJ in order for their transaction to be processed.
This includes foreign residents that purchase real estate in Jamaica and/or are parties to security documents such as mortgages and debentures to be registered in Jamaica. This is even if the foreign person or company is not resident in Jamaica and does not ordinarily transact business in Jamaica.
The TRN application process, in the case of corporate foreign residents, includes submitting a completed application form and notarised/certified copies of the company’s charter documents.
In response to several issues raised about the practical operation of the requirement, the TAJ issued correspondence on June 28, 2013 stating that TRNs would not be required from non-compliant parties in the following transactions:
- Cases which involve foreclosures;
- Cases in which international parties/entities play a facilitative role, such as lender or a guarantor in mortgages or loan agreements; and
- Certain contentious cases which involve un-cooperative parties who refuse to sign the relevant documents and/or provide their TRN. In this instance, a statutory declaration should accompany the subject document being filed with the TAJ.
In April 2013 the Stamp Duty and Transfer Tax payable on real estate sales were each increased by 1% to 4% and 5% respectively. Stamp Duty is a percentage of the sale price and is usually split between the purchaser and vendor. Transfer Tax is a percentage of the value of the land being sold (as such value is assessed by TAJ) and is payable by the vendor. Consequently the taxes, payable by both vendors and purchasers, associated with the sale/purchase of real estate have increased.
In April 2013 the formula for the calculation of the annual tax on real estate was amended. The new formula has resulted in significant increases in property tax being payable on parcels of land in Jamaica, in many instances the increase has been more than 100% over the tax paid in the previous year. This has significantly increased the annual tax liability for land owners in Jamaica especially the owners of commercial real estate.