The Senate passed legislation on March 14 to exempt locally recruited World Bank employees from paying income tax.
The legislation, an Act to Amend the Bretton Woods Agreement Act, was piloted by Minister of Foreign Affairs and Foreign Trade and Leader of Government Business in the Upper House, Senator the Hon. Kamina Johnson Smith, during the Senate’s sitting at Gordon House.
She explained that the Bretton Woods Agreement Act incorporates into domestic law, the Articles of Agreement that govern the operation of the multilateral arrangement to establish the International Monetary Fund (IMF) and International Bank for Reconstruction and Development, also known as the World Bank.
“The Bretton Woods Agreement Act has been the only instrument governing Jamaica’s relationship with the Bank since Jamaica became a member of the World Bank Group in 1963. Among the matters addressed by the principal Act is the tax treatment of locally recruited staff of the Bank; but it does not… provide for their tax exemption,” the Minister said.
Senator Johnson Smith further explained that in 1993, the Government entered into an Establishment Agreement with the World Bank to operationalise its office in Kingston.
“The 1993 Agreement, however, incorporated tax exemption provisions taken from the 1947 United Nations (UN) Convention on the privileges and immunities of specialised agencies, provisions which were not in our Act.
“This made the tax treatment of Jamaican nationals employed to the Bank unclear, as the Agreement was now in conflict with the principal Act. So the Bill before us seeks to resolve this matter by amending the Bretton Woods Agreement Act to incorporate the tax exemption provisions included in the 1993 Agreement,” she said.
Minister Johnson Smith noted that the income tax exemption will now extend beyond foreign World Bank officials to include Jamaican nationals, in alignment with the provisions of the 1947 United Nations Convention on the Privileges and Immunities of Specialized Agencies.
She further explained that this measure seeks to ensure that Jamaican employees of the World Bank receive the same income tax exemptions as their overseas counterparts.
Senator Johnson Smith pointed out that the Bill has two clauses.
“Clause Two provides that Clause 2 (a) and (b) of the Bill renumber Section 5 of the Principal Act, to include a new Subsection 2 and a new Subsection 3 which provide, respectively, that no tax shall be levied on or in respect of salaries and emoluments paid by the Bank to executives, directors, alternates, officials or employees of the Bank who are citizens of Jamaica,” she outlined.
“[Further] that the tax exemption granted shall not apply to a person who is employed to the Bank in a category that receives hourly wages or a person who is employed to the Bank in the category of a consultant or contractor,” the Minister added.
She noted that this aligns with the UN General Assembly Resolution 76 (1) of December 7, 1946, wherein it was recognised and adopted by the membership that hourly paid staff, consultants and contractors are not among the workers who were granted tax exemption under the UN Convention on Privileges and Immunities.
Leader of Opposition Business, Senator Peter Bunting, voiced the Opposition’s support for the legislation.
“The Opposition has no objection and, certainly, we will support it,” he said.
