- Updated
- May 2025
- Sections
- 15
- Questions
- 36
Key Facts
Core Framework
Meaning of arm’s length principle - Income Tax Act, Section 17 (1)
Income Tax Act- Section 17D; Eighth Schedule of the Income Tax Act; Transfer Pricing Practice Note (2017) The Income Tax (Transfer Pricing Documentation) Regulations, 2015.pdf
Significant portions of the OECD Transfer Pricing Guidelines as at 2015 were incorporated into the domestic legislation and therefore given legally binding effect. The OECD Transfer Pricing Guidelines are also referred to as a source of interpretation/guidance for domestic legislation by virtue of their reference and incorporation into the Transfer Pricing Practice Note published by Tax Administration Jamaica and used as a tool of interpretation by taxpayers in the interpretation and application of the law.
Paragraph 3 of the Eighth Schedule of the Income Tax Act Paragraphs 52-57 Transfer Pricing Practice Note (2017)
The legislation makes provision for a comparability analysis with requirements and considerations which are similar to the guidance in Chapter III of the TPG. Further, Jamaica’s Transfer Pricing Practice Note was modelled off of the OECD TPG and incorporated the then guidance on comparability analysis outlined in Chapter II of the TPG
From the perspective of Tax Administration Jamaica, as a developing country it is preferred to have domestic comparables as most other available comparables are derived from a developed nation context and require too many adjustments making them unreliable. Further, access to external databases containing comparables is not available to the Tax Administration Jamaica at this time.
Para. 165 of Transfer Pricing Practice Note (2017)
TAJ is precluded under Section 4 of the ITA from disclosing 3rd party information in relation to another taxpayer gathered under the ITA. Accordingly, TAJ considers itself prohibited from using third-party comparable information, i.e. so called “secret comparables” as the basis of assessment.
Paragraph 12(3)The Eighth Schedule of the Income Tax Act
(3) For the purposes of this paragraph, the arm’s length range in relation to a connected transaction is a range of financial indicators produced by the application of the most appropriate transfer pricing method to a number of independent transactions that are reasonably comparable to the connected transaction
Documentation
The information found in Income Tax (Transfer Pricing Documentation) Regulations, 2015 is in keeping with the information required in the local file pursuant to Annex II to Chapter V of the TPG. The Practice Notes also contain a Schedule 8 which outlines the format required for the taxpayer to file the relevant return.
The information found in Income Tax (Transfer Pricing Documentation) Regulations, 2015 is in keeping with the information required in the local file pursuant to Annex II to Chapter V of the TPG. The Practice Notes also contain a Schedule 8 which outlines the format required for the taxpayer to file the relevant return.
The information found in Income Tax (Transfer Pricing Documentation) Regulations, 2015 is in keeping with the information required in the local file pursuant to Annex II to Chapter V of the TPG. The Practice Notes also contain a Schedule 8 which outlines the format required for the taxpayer to file the relevant return.
Section 17(5) of the Income Tax Act
(5) With effect from the year of assessment 2016, if any person fails to certify as required by subsection (4) or provides an incorrect or incomplete certificate or return due to the taxpayer’s negligent or fraudulent conduct, he shall be liable on summary conviction in a Resident Magistrate’s Court to a fine not exceeding two million dollars and, in default of payment thereof, to imprisonment for a term not exceeding twelve months.
TP Methods
- CUP
- Resale Price
- Cost Plus
- TNMM
- Profit Split
- Other
Selection: Hierarchy of methods
Dispute Resolution
S 72 of the Income Tax Act Jamaica MAP Profile
Our domestic judicial framework is a mechanism which taxpayers or the administration may utilise in resolving transfer pricing issues and disputes. The Revenue Appeals Division of the Ministry of Finance of the Public Service facilitates additional appeals. This is a quasi-judicial body. For further information, please refer to Jamaica’s MAP Profile.
S 72 of the Income Tax Act Jamaica MAP Profile
Our domestic judicial framework is a mechanism which taxpayers or the administration may utilise in resolving transfer pricing issues and disputes. The Revenue Appeals Division of the Ministry of Finance of the Public Service facilitates additional appeals. This is a quasi-judicial body. For further information, please refer to Jamaica’s MAP Profile.
Simplifications
Special Topics
Paragraph 15 of The Eighth Schedule of the Income Tax Act Transfer Pricing Practice Note (2017)
Yes. If so, does your domestic transfer pricing framework follow (or largely follow) the guidance in Chapter VI of the TPG? Yes
Appendix 7 of the Transfer Pricing Practice Note (2017)
Paragraph 13(1) & (2) of the Eighth Schedule of the Income Tax Act
Yes. If so, does your domestic transfer pricing framework follow (or largely follow) the guidance in Chapter VII of the TPG? Yes
Transfer Pricing Practice Note (2017), pg. 8 - Scope #10 Paragraphs 2-11, EIGHTH SCHEDULE (Section 17) - Transfer Pricing, Income Tax Act
Our Transfer Pricing Practice Note (TP PN 2017) states that “Jamaica's transfer pricing regime embodies the arm's length principle and requires that, for tax purposes, the terms and conditions agreed to between connected persons in their commercial or financial relations be those that would have been agreed to had the persons been dealing with each other at arm's length”. Thus, Jamaica’s domestic framework is in keeping with the general provisions of Chapter X of the TPG in terms of its interaction with Chapters 1-III of the said Guidelines that is enshrined in our legislation in the EIGHTH SCHEDULE - Transfer Pricing of the Income Tax Act. Therefore, taking into consideration that our TP PN 2017 makes specific reference to the OECD TPG as a source of interpretation/ guidance for our domestic legislation, it stands to reason that Chapter X of the TPG as a whole, has particular relevance to aid in the accurate delineation and analysis of financial transactions (especially relating to specific issues such as treasury functions, use of credit ratings, guarantees, cash pooling etc.). Noteworthy also, is that our TP PN 2017 endorses the CUP method, subject to the facts and circumstances of the case, as the preferred TP Method to apply to connected party financial transactions.
Full OECD Questionnaire
Legal ReferenceMeaning of arm’s length principle - Income Tax Act, Section 17 (1)
Legal ReferenceIncome Tax Act- Section 17D; Eighth Schedule of the Income Tax Act; Transfer Pricing Practice Note (2017) The Income Tax (Transfer Pricing Documentation) Regulations, 2015.pdf
Significant portions of the OECD Transfer Pricing Guidelines as at 2015 were incorporated into the domestic legislation and therefore given legally binding effect. The OECD Transfer Pricing Guidelines are also referred to as a source of interpretation/guidance for domestic legislation by virtue of their reference and incorporation into the Transfer Pricing Practice Note published by Tax Administration Jamaica and used as a tool of interpretation by taxpayers in the interpretation and application of the law.
Legal ReferenceSection 2(1) and (2) of the Income Tax Act: Section 17(1) (8) and (9) of the Income Tax Act
Of note, the language used by Jamaica is not “related parties” but is “connected persons” which is treated in a like manner. Section 2(1), (2) and (3) of the Income Tax Act: "connected persons" shall be construed in accordance with subsection (2); (2) For the purposes of this Act the following persons shall be treated as being connected with a given person (“A”) and he with them and shall be so treated notwithstanding that at the relevant time any of the persons in question (not being individuals) had not yet come into existence or had seem to exist- (a) A’s relatives; (b) the husband or wife of any relative of A; (c) A’s partners; (d) where A is a trustee of a settlement... (e) where A is a settlor or beneficiary of a settlement... (f) any person acting together with A to secure or exercise control of a body corporate; (g) any person acting on the directions of A to secure or exercise control of a body corporate; (h) bodies corporate of which A has control; (i) bodies corporate of which A and persons connected with him together have control; (j) where A is a body corporate... (k) where A is a principal member of a body corporate...
Legal ReferenceThe transfer pricing methods are found at Paragraph 5, Paragraph 9 and 10 of the Eighth Schedule of the Income Tax Act
Paragraph 5, 9 and 10 of the Eighth Schedule of the Income Tax Act. 5. The following are the transfer pricing methods that, subject to paragraph 10 may be applied in determining the arm’s length consideration in respect of a connected transaction, as well as the manner of applying them – (a) Comparable Uncontrolled Price Method (b) Resale Price Method (c) Cost Plus Method (d) Transactional Net Margin Method (e) Transactional Profit Split Method. 9. Notwithstanding paragraph 5, another method (other than a transfer pricing method) may be applied by a person for determining arm’s length consideration in respect of a connected transaction if the Commissioner General is satisfied that – (a) none of the transfer pricing methods can reasonably be applied... and (b) the other method to be applied yields a result consistent with that which would be achieved by persons participating in a comparable independent transaction.
- CUP (provided)
- Resale Price (provided)
- Cost Plus (provided)
- TNMM (provided)
- Profit Split (provided)
- Other (provided)
Legal ReferenceParagraphs 6-8 of the Eighth Schedule of the Income Tax Act
6. Where, taking account of the criteria described in paragraph 4, a transfer pricing method described in paragraph 5(a) and a transfer pricing method described in paragraph 5(b) to (e) can be applied with equal reliability, the transfer pricing method described in paragraph 5(a) shall be applied. 7. Where, taking account of the criteria described in paragraph 4, a transfer pricing method described in paragraph 5(a) to (c) and a transfer pricing method described in paragraph 5(d) to (e) can be applied with equal reliability, one of the transfer pricing methods described in paragraph 5(a) to (c) shall be applied.
- Hierarchy of methods (selected)
- Most appropriate method (not selected)
- Other (if so, please explain) (not selected)
Legal ReferenceTransfer Pricing Practice Note (2017) At pages 20, para. 89 of Practice Note.
It is not specifically provided for in the legislation. However, guidelines are provided for in the Transfer Pricing Practice Note (2017). The following are some cases of when the CUP method can be applied. The CUP method is most appropriate with internationally traded commodities such as, but not limited to, bauxite, alumina, coffee beans and sugar or where the product or service is sold to both connected and independent persons.
Legal ReferenceParagraph 3 of the Eighth Schedule of the Income Tax Act Paragraphs 52-57 Transfer Pricing Practice Note (2017)
The legislation makes provision for a comparability analysis with requirements and considerations which are similar to the guidance in Chapter III of the TPG. Further, Jamaica’s Transfer Pricing Practice Note was modelled off of the OECD TPG and incorporated the then guidance on comparability analysis outlined in Chapter II of the TPG
From the perspective of Tax Administration Jamaica, as a developing country it is preferred to have domestic comparables as most other available comparables are derived from a developed nation context and require too many adjustments making them unreliable. Further, access to external databases containing comparables is not available to the Tax Administration Jamaica at this time.
Legal ReferencePara. 165 of Transfer Pricing Practice Note (2017)
TAJ is precluded under Section 4 of the ITA from disclosing 3rd party information in relation to another taxpayer gathered under the ITA. Accordingly, TAJ considers itself prohibited from using third-party comparable information, i.e. so called “secret comparables” as the basis of assessment.
Legal ReferenceParagraph 12(3)The Eighth Schedule of the Income Tax Act
(3) For the purposes of this paragraph, the arm’s length range in relation to a connected transaction is a range of financial indicators produced by the application of the most appropriate transfer pricing method to a number of independent transactions that are reasonably comparable to the connected transaction
Legal ReferenceParagraph 4 (d) of the Eighth Schedule of the Income Tax Act
(4) The arm's length consideration in respect of a connected transaction shall be determined by applying the most appropriate transfer pricing method to the circumstances of the case, taking into consideration the following criteria- (d) the degree of comparability between the connected transaction and independent transaction, including the reliability of comparability adjustments, if any, that may be required to eliminate differences in the comparison of the transactions.
Legal ReferenceParagraph 15 of The Eighth Schedule of the Income Tax Act Transfer Pricing Practice Note (2017)
Yes. If so, does your domestic transfer pricing framework follow (or largely follow) the guidance in Chapter VI of the TPG? Yes
Legal ReferenceAppendix 7 of the Transfer Pricing Practice Note (2017)
Legal ReferenceParagraph 13(1) & (2) of the Eighth Schedule of the Income Tax Act
Yes. If so, does your domestic transfer pricing framework follow (or largely follow) the guidance in Chapter VII of the TPG? Yes
Legal ReferenceParagraph 14(2) of the Eighth Schedule to Income Tax Act
Yes. If so, does it follow (largely follow) the low value-adding services approach in Chapter VII? Yes
Legal ReferenceSection 13 & 16 of Income Tax Act
S.13 of ITA allowable deductions ‘wholly & exclusively incurred in earning the income’. As such when inter-group expenses are incurred, the taxpayer is obligated to prove that these services were wholly and exclusively incurred in earning the income, which includes justifying the performance, terms and consideration of the transaction. S. 16 of ITA ‘Artificial transactions’ This section covers circumstance where the terms of an intra-group transaction are done on terms or in circumstances which can be proved to be artificial whether because the transaction never actually occurred or did not occur in the manner or on the terms declared, or because it really is of a different nature than that which was declared.
Legal ReferenceTransfer Pricing Practice Note (2017), pg. 8 - Scope #10 Paragraphs 2-11, EIGHTH SCHEDULE (Section 17) - Transfer Pricing, Income Tax Act
Our Transfer Pricing Practice Note (TP PN 2017) states that “Jamaica's transfer pricing regime embodies the arm's length principle and requires that, for tax purposes, the terms and conditions agreed to between connected persons in their commercial or financial relations be those that would have been agreed to had the persons been dealing with each other at arm's length”. Thus, Jamaica’s domestic framework is in keeping with the general provisions of Chapter X of the TPG in terms of its interaction with Chapters 1-III of the said Guidelines that is enshrined in our legislation in the EIGHTH SCHEDULE - Transfer Pricing of the Income Tax Act. Therefore, taking into consideration that our TP PN 2017 makes specific reference to the OECD TPG as a source of interpretation/ guidance for our domestic legislation, it stands to reason that Chapter X of the TPG as a whole, has particular relevance to aid in the accurate delineation and analysis of financial transactions (especially relating to specific issues such as treasury functions, use of credit ratings, guarantees, cash pooling etc.). Noteworthy also, is that our TP PN 2017 endorses the CUP method, subject to the facts and circumstances of the case, as the preferred TP Method to apply to connected party financial transactions.
Jamaica has no thin capitalization, constructive dividend, fixed ratio, group ratio and or targeted rules relating to financial transactions as referred to under BEPS Action 4 or otherwise.
Legal ReferenceAppendix 5 of Transfer Pricing Practice Note (2017)
Yes. If so, does your domestic transfer pricing framework follow (or largely follow) the guidance in Chapter VIII of the TPG? Yes
The information found in Income Tax (Transfer Pricing Documentation) Regulations, 2015 is in keeping with the information required in the local file pursuant to Annex II to Chapter V of the TPG. The Practice Notes also contain a Schedule 8 which outlines the format required for the taxpayer to file the relevant return.
- Master file consistent with Annex I to Chapter V of the TPG (not selected)
- Local file consistent with Annex II to Chapter V of the TPG (selected)
- Country-by-country report consistent with Annex III to Chapter V of the TPG (not selected)
- Specific transfer pricing returns (separate or annexed to the tax return) (selected)
- Other (specify): (not selected)
Legal ReferenceRegulation 3 of The Income Tax (Transfer Pricing Documentation ) Regulations
Transfer Pricing documentation is to be in the English language. It is to be in place as at the statutory tax return’s filing date. The taxpayer will be required to provide the TP documentation within 30 working days of receiving a written request from the Commissioner General to do so. This is in addition to the Commissioner’s general power to request additional information in the course of an audit or in relation to a return of income. Jamaica has not yet implemented CbCR.
Legal ReferenceSection 17(5) of the Income Tax Act
(5) With effect from the year of assessment 2016, if any person fails to certify as required by subsection (4) or provides an incorrect or incomplete certificate or return due to the taxpayer’s negligent or fraudulent conduct, he shall be liable on summary conviction in a Resident Magistrate’s Court to a fine not exceeding two million dollars and, in default of payment thereof, to imprisonment for a term not exceeding twelve months.
Regulation 2 of the Income Tax (Transfer Pricing Documentation) Regulations 2015. Every person with a gross annual revenue of $500 million dollars in the previous year of assessment shall keep…transfer pricing documentation that verifies that the conditions in their connected party transactions for the relevant year of assessment are consistent with the arm’s length consideration. Therefore, if a person is under the threshold they are exempt from keeping such documentation.
Legal ReferenceS 72 of the Income Tax Act Jamaica MAP Profile
Our domestic judicial framework is a mechanism which taxpayers or the administration may utilise in resolving transfer pricing issues and disputes. The Revenue Appeals Division of the Ministry of Finance of the Public Service facilitates additional appeals. This is a quasi-judicial body. For further information, please refer to Jamaica’s MAP Profile.
- Rulings (selected)
- Enhanced engagement or cooperative compliance programmes (selected)
- Advance Pricing Agreements (APA) (selected)
- Unilateral APAs (not selected)
- Bilateral APAs (selected)
- Multilateral APAs (selected)
- International Compliance Assurance Programme (ICAP) (not selected)
- Mutual Agreement Procedures (selected)
- Other (please specify): (selected)
N/A. Due to the current domestic legislative calendar and resource constraints on the passage of legislation, Jamaica has not yet provided a political commitment on the matter.
Legal ReferenceSection 72 of the Income Tax Act
The Commissioner General of the Tax Administration Jamaica holds a general power to make assessments to the best of his judgment under the Income Tax Act.
Legal ReferenceS 5 and 13 of the Income Tax Act
Yes, a taxpayer can make a year-end adjustment. Our Transfer Pricing framework does not specifically require or permit it. However, the general domestic legislative framework requires it. Taxpayers are required to adjust their calculation of profits in accordance with the Income Tax Act.
1. They can be made through MAP. 2. They can be made pursuant to section 72 of the Income Tax Act, using the Commissioner’s discretion
Article 7 as it read before 2010 (5 treaties) and Article 7 as it reads after 2010 (7 treaties).
- Article 7 as it read before 2010. (selected)
- Article 7 as it reads after 2010. (selected)
- Other (please provide additional details) (not selected)
This matter has not yet arisen in practice and so we are not able to provide a conclusive response on this area.
There is no specific guidance for the attribution of profits to permanent establishments of non-resident entities. However, our domestic Transfer Pricing Rules are aligned with the OECD 2010 TP Guidelines.
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