Pay the BPO tax
Dear Editor,
I totally support the Government’s 12.5 per cent tax on the business process outsourcing (BPO) sector.
There are labour, overhead and other synergistic savings for these entities’ corporate structure when they locate here. In theory, if they are from the US, where the corporate tax rate is about 39 per cent, they would receive a tax credit from the US revenue authorities for the tax paid in Jamaica at 12.5 per cent (39 per cent less the 12.5 per cent) and pay the difference as US taxes.
Now, more in theory, if they pay no Jamaican tax at all, unless their is a tax sparing provision in the treaty, then they pay US tax at the full rate, as they have no Jamaican taxes to credit against their US liability. I only know of one such negotiated special provision and it was by Edward Seaga — a UK/Jamaica treaty, I believe.
However, this is the theory. In practice, the savings earned by having back office operations here is not often routed back to the US immediately for exposure to US taxes. And if the structure is legally correct, that profit can float in a tax haven tax-free for years. That is the cold, hard truth.
I have no sympathy for the BPO sector. It costs our Government money to educate our English speakers, to maintain roads, prosecute those who would steal lead sheets from your operations. Be a corporate citizen and pay your taxes without griping.
Susan Allen
susanallen112@gmail.com