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Jamaica – Transfer Pricing (2025)

Jamaica’s domestic transfer pricing framework embeds the arm’s length principle in the Income Tax Act. The arm’s length principle is explicitly referenced in Income Tax Act, Section 17(1). Key transfer pricing provisions are contained in the Eighth Schedule of the Income Tax Act and in the Income Tax (Transfer Pricing Documentation) Regulations, 2015. Tax Administration Jamaica (TAJ) has issued a Transfer Pricing Practice Note (2017) which supplements and interprets the statutory provisions. Significant portions of the OECD Transfer Pricing Guidelines as of 2015 were incorporated into domestic legislation via the Eighth Schedule and related provisions, giving those portions practical legal effect. The Practice Note is used as an interpretative and operational tool by both taxpayers and the tax administration.

Arm’s length principle and role of the OECD Guidelines

The arm’s length principle is codified in domestic law (Income Tax Act, Section 17(1)), and the OECD Transfer Pricing Guidelines play an interpretative role. The Income Tax Act includes references to the Guidelines through Section 17D and the Eighth Schedule, and the Transfer Pricing Practice Note (2017) draws heavily on the OECD Guidelines in providing guidance. As a result, the Practice Note reflects OECD concepts such as comparability analysis, allocation of profits, and chapter-specific guidance (including Chapters VI and X), and it is relied upon by TAJ and taxpayers when interpreting and applying domestic rules.

Jamaica uses the term “connected persons” rather than “related parties”. The statutory definition appears in Section 2(1), (2) and (3) of the Income Tax Act and is referenced in Section 17(1), which defines “connected person” in relation to a participant in a transaction. The definition is comprehensive: it includes relatives and spouses of relatives, partners, trustees and settlors in many trust situations, persons acting together to secure or exercise control of a corporate entity, persons acting on the directions of A to secure or exercise control, corporate bodies under the control of A, and bodies corporate under common control or various group control configurations. Section 17(8) and (9) provide administrative remedies whereby the Commissioner General may treat a person as a connected person and a transaction as a connected transaction if the taxpayer fails to provide requested information to the Commissioner General’s satisfaction.

Methods and application criteria (hierarchy if any)

Transfer pricing methods are set out in the Eighth Schedule of the Income Tax Act (Paragraphs 5, 9 and 10). The legislation lists the usual five methods: Comparable Uncontrolled Price (CUP), Resale Price Method, Cost Plus Method, Transactional Net Margin Method (TNMM) and Transactional Profit Split Method, with Paragraph 5 providing definitions and application descriptions for each. Paragraph 9 allows the use of an alternative method (not listed) where none of the enumerated methods can reasonably be applied and where the alternative method yields a result consistent with comparable independent transactions. Paragraph 10 permits the Commissioner General to apply another method (even if not used by the taxpayer) provided it meets the statutory criteria.

The Eighth Schedule contains a hierarchy in Paragraphs 6-8: where the CUP method (Paragraph 5(a)) and a method from Paragraph 5(b)-(e) have equal reliability, CUP must be applied; where methods from Paragraph 5(a)-(c) and Paragraph 5(d)-(e) are equally reliable, a method from Paragraph 5(a)-(c) should be preferred; and it is not necessary to apply more than one method to a particular connected transaction. This reflects a combined approach: the “most appropriate method” concept together with a legislated hierarchy in cases of equal reliability.

Comparability and ranges (preference for comparables, adjustments, ranges)

The Eighth Schedule (Paragraph 3) and the Transfer Pricing Practice Note require a comparability analysis consistent with Chapter III of the OECD Guidelines. Paragraph 4(d) of the Eighth Schedule specifically requires taking into consideration the degree of comparability and the reliability of any comparability adjustments needed. For ranges, Paragraph 12(3) defines the arm’s length range as the range of financial indicators produced by applying the most appropriate method to a set of independent transactions reasonably comparable to the connected transaction. TAJ prefers domestic comparables because comparables from developed countries often require too many adjustments and because TAJ lacks access to external commercial databases. Use of “secret comparables” is not permitted: Section 4 of the Income Tax Act precludes TAJ from disclosing third-party information, and TAJ considers itself prohibited from using third-party comparable information (so-called “secret comparables”) as the basis for an assessment, consistent with paragraph 165 of the Transfer Pricing Practice Note (2017).

Documentation and reporting (Master, Local, CbC, thresholds, language, timing, forms)

Jamaica requires transfer pricing documentation. The Income Tax (Transfer Pricing Documentation) Regulations, 2015 and the Transfer Pricing Practice Note set out requirements aligned with the OECD’s Annex II (local file). A local file consistent with Annex II is required and specific transfer pricing returns (or annexes) must be filed in the prescribed format (Schedule 8 of the Practice Note outlines a required format). Jamaica has not implemented Country-by-Country Reporting (CbCR) to date and there is no domestic requirement for a master file consistent with Annex I. Regulation 2 of the Transfer Pricing Documentation Regulations sets the documentation threshold: every person with gross annual revenue of 500 million Jamaican dollars in the previous year of assessment must keep transfer pricing documentation demonstrating that conditions in their connected party transactions are consistent with arm’s length consideration; persons below this threshold are exempt from the documentation obligation. Documentation must be prepared in English and be in place by the taxpayer’s statutory tax return filing date. Under Regulation 3, the taxpayer must provide the documentation within thirty (30) working days of receiving a written request from the Commissioner General, subject to the Commissioner’s general audit powers.

The framework contains penalties for documentation non-compliance: Section 17(5) provides that, with effect from the year of assessment 2016, a person who fails to certify as required under subsection (4) or who provides an incorrect or incomplete certificate or return due to negligent or fraudulent conduct shall be liable on summary conviction to a fine not exceeding two million Jamaican dollars and, in default of payment, to imprisonment for a term not exceeding twelve months.

Safe harbours / exemptions / materiality

Jamaica does not provide general safe harbours or industry-specific simplification measures in its current domestic TP framework. The primary practical exemption is the documentation threshold (gross annual revenue below 500 million Jamaican dollars), which relieves smaller taxpayers from maintaining the local file.

APAs and MAP; procedures and timing where available

Jamaica offers administrative mechanisms to prevent and resolve transfer pricing disputes, including rulings, enhanced engagement or cooperative compliance programmes, Advance Pricing Agreements (APAs) in bilateral and multilateral forms, and Mutual Agreement Procedures (MAP). The jurisdiction reports availability of bilateral and multilateral APAs; unilateral APAs are not reported as available. The domestic quasi-judicial Revenue Appeals Division in the Ministry of Finance provides an additional dispute resolution channel. Specific procedural timelines and administrative forms for APAs and MAP are not provided in the profile beyond these general availabilities.

Penalties and other considerations (secondary adjustments, re-characterisation, year-end adjustments, PEs)

The legislation enables the Commissioner General to reclassify a taxpayer as a connected person and to treat a transaction as a connected transaction where information is not provided (Section 17(8) and (9)). Secondary adjustments can be effected through MAP or pursuant to the Commissioner’s discretion under Section 72 of the Income Tax Act by way of an assessment to the best of his judgment. Regarding year-end adjustments, the transfer pricing framework does not specifically require or permit year-end adjustments, although taxpayers may make year-end adjustments as necessary under the general domestic law (Sections 5 and 13 of the Income Tax Act) to correctly calculate taxable profit. Section 16 of the Income Tax Act addresses “artificial transactions” and permits re-characterisation where transactions did not actually occur as declared.

For permanent establishments, Jamaica’s tax treaties include Article 7 as it read before 2010 in five treaties and Article 7 as it reads after 2010 in seven treaties. Jamaica does not currently apply the Authorized OECD Approach (AOA) in practice and states that the matter has not yet arisen. The domestic law does not provide specific guidance for the attribution of profits to permanent establishments of non-resident entities.

Other relevant rules and administrative practices

Commodity transactions: although this summary excludes commodities by instruction, the domestic practice note addresses commodities. The Transfer Pricing Practice Note (2017), at page 20 paragraph 89, states that paragraphs 2.18-2.22 of the OECD Guidelines are followed for commodities and that the CUP method is often most appropriate for internationally traded commodities and for certain financial items such as interest, royalties and commissions. Intangibles: Paragraph 15 of the Eighth Schedule and the Practice Note reflect Chapter VI of the OECD Guidelines and Jamaica indicates that its domestic framework follows that guidance; however, no specific HTVI (hard-to-value intangibles) regime is implemented in practice (the profile answers “No” to the existence of specific HTVI guidance). ## Intra-group services: the Eighth Schedule Paragraphs 13(1) and (2) provide guidance, and Paragraph 14(2) allows the simplified approach for low value-adding intra-group services consistent with Chapter VII. Sections 13 and 16 of the Income Tax Act are relevant to deductibility and to detecting artificial intra-group transactions.

Conclusion

Jamaica’s transfer pricing regime is anchored in the Income Tax Act and the Eighth Schedule, and it is operationalised through the Transfer Pricing Practice Note (2017) and related regulations. The domestic rules define connected persons broadly, set out the five core TP methods with a statutory hierarchy for application in cases of equal reliability, require a local file for taxpayers above a 500 million Jamaican dollar revenue threshold, and impose significant penalties for negligent or fraudulent documentation failures. The administration prefers domestic comparables, disallows the use of secret comparables for assessments, and has implemented APAs and MAP as dispute resolution tools. Jamaica has not yet implemented CbCR and does not offer general safe harbours. The country follows OECD guidance in many areas but does not provide specific domestic guidance for HTVI or for attribution to permanent establishments.

References

For further information and consolidated country profiles see https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html

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