TAJ Publishes Transfer Pricing Agreement Practice Note

Tax Administration Jamaica (TAJ) recently published the final version of a Transfer Pricing Agreement (TPA) Practice Note, as it continues moving forward in the implementation of the transfer pricing regime in Jamaica. The purpose of the Practice Note is to provide taxpayers and tax officials with guidance on transfer pricing agreements in accordance with the transfer pricing rules that were enacted in November 2015. Any taxpayer subject to the transfer pricing rules in section 17 of the Income Tax Act of Jamaica may request a transfer pricing agreement.

TAJ’s Transfer Pricing Agreement Programme, also known in some tax jurisdictions as an Advance Pricing Agreement (APA) Programme, is designed to provide a cooperative approach for resolving transfer pricing issues on a prospective basis. It clearly sets out the pre and post- application stages of the programme.

The TPA is a negotiated agreement between a taxpayer and TAJ, which identifies, in
advance, specified connected transactions covered by the agreement. The TPA sets
out an appropriate set of criteria that addresses:

• Transfer Pricing Methodology
• Comparables
• Appropriate adjustments
• Critical assumptions for the determination of an ALC in accordance with the Income Tax Act, for specified connected transactions over a fixed
  period of time.

TAJ will continue to work with taxpayers and hold sensitisation sessions with business interests. TAJ officials, through the Transfer Pricing Unit of the Large Taxpayer Office, are open to having informal discussions with taxpayers or their advisors, before an application for a TPA is lodged or committed to, about what information will be required in their particular circumstances to support a TPA proposal, or about the transfer pricing issues that the taxpayer has identified, and how TAJ would envisage structuring the TPA process in the light of these factors.

In finalising the TPA Practice Note, Tax Administration Jamaica held discussions with stakeholders and taxpayers and sought guidance from international consultants and organisations like the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD) and the World Bank Group (WBG).

The Transfer Pricing Agreement (TPA) Practice Note is available on the TAJ website at www.jamaicatax.gov.jm in the Transfer Pricing Information Hub, along with other transfer pricing related presentations, documents, news releases, forms and web links.