PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

Exchange) provide a timely opportunity to revisit the growth-enhancing effects of
reducing the burden of these taxes on the domestic capital market.
2.0 Scope of the Stamp Duty and Property Transfer Taxes
Stamp duty is a tax charged for registering and legalizing documents/conveyances. In
particular, capital market transactions (such as the issuance and trade in corporate debt
instruments – bonds, debentures, promissory notes and commercial paper) that require
documents to be stamped in order to register and legalize the transfer of the financial
instruments, are liable for stamp duty. Duty rates are specified in the detailed schedule in
the Stamp Duty Act and is split evenly between the transferor and transferee. 51
Property transfer tax is levied on the transfer of “property”, which is defined to include,
among other things: land, lease of land, and securities. Securities are defined in the
Transfer Tax Act as the securities of a company, and includes any shares therein,
debentures, and rights or interests in, to, or over any securities, but does not include
bonds, or other securities issued by the Government of Jamaica. Further, debentures are
defined as “any debentures, debenture stock or bonds of a company, whether constituting
a charge on the assets of the company or not” 52 . Property transfer tax is currently levied
at a rate of 4% of the market of the property being transferred and is payable by the
transferor (or seller) of the property.
Based on the scope of the stamp duty and property transfer tax outlined above, stamp
duty and property transfer tax would be applicable to most debt and/or equity instruments
issued and traded in Jamaica’s capital markets. 53
3.0 Revisiting the Application of Stamp Duty and Property Transfer Taxes
In the aftermath of the Jamaica Debt Exchange (JDX), domestic interest rates have
declined:
Interest rates on Government of Jamaica (GOJ) debt instruments have
declined and remained relatively low. The benchmark 6-month GOJ treasury
bill rate stood at 7.99% and the BOJ 30-day open-market rate was 8.0% at end
of September 2010 compared with 17.35% and 12.5%, respectively, at end of
September 2009. By January 21, 2010 (approximately one year after the
launch of the JDX), the GOJ benchmark rates had fallen further to 7.46%.
51 Bahl & Wallace (2007), p.69, provide an illustrative listing of objects of stamp duty. Illustrative rates for
typical debt instruments are as follows: Demand promissory notes (e.g. commercial paper) - $10 per $200
or 5%); Bonds (given as security for the payment of any definite and certain sum of money) - $30 per$2000
or 1.5%. (See the schedule to the Stamp Duty Act).
52 See the Transfer Tax Act (emphasis added).
53 There are specific exemptions from the application of the property transfer tax, notably shares quoted on
the Jamaica Stock Exchange (or other recognized exchanges) and shares in unit trusts.
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