Petroleum Refining Industry Encouragement) Act

8/7/2019 Petroleum Refining Industry Encouragement) Act

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PETROLEUM R E F I NI NG I NDUS TRY(E NC OUR A GE ME NT)

THE PETROLEUM REFINING I NDUS TR Y(ENCOURAGEMENT) ACTARRANGEMENT OF SECTIONS

I . Short title.PARTI. General

2. Interpretation.3. Approval of company as recognized reliner of oil.4. Application for approval.PART II. Concessionsin respect of Customs duty and general

comumption tax5. Relief from customs andgeneralconsumption tax.6. Relief from cwtoms duty and g m d onsumption tax h nrpcct7. Special provisions relating to articles imported free.8. Restriction upon disposition of articles imported free.

of specified raw material.

PART II. Concessions in respect ofincome ax9. Definition and application.

10. Relief from income tax.1 1. Dividends.12. commissioner of Taxpayer Audit and Assessment empowered to

issue certificates regarding concessions granted under the Act.PART W. Ofher ConcesSions

13. Assistance to recognized r e b e r of oil.14. Power of Minister to withhoId assistance.

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2 PETROLEUM REFINING INDUSTRY(ENCOURAGEMENT)PARTV . MiscelIaneous

15 . Savings.16. Restriction on us e of petroleum refinery.17. Power to revoke order spproving company as a recognized18 . Regulations.19. Power to add to or remove from Schedule.

refiner of oil.

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PE TR OLE UM REFINIAG INDUSTRY(ENCOURAGEMENT)

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L e W24lof 1961.12 of 1985w.916of 1Wl[14zh March, 1962.1 S. 64.

THE PETROLEUM REFINING INDUSTRY(ENCOURAGEMENT) ACT Ad

1. This Act may be cited as the Petroleum Refining ShorttitIa.Industry (Encouragement) Act.

PART . General2. In this Act unless the context otherwise requires- tion.ntcrpreh-

annual allowances, approved rate, initial allow-ances, investment allowances and year ofassessmnt shall have the same meaning respect-ively as in the Income Tax Act;(a ) any company incorporated or registered underany law in force in the Island;( b ) any company which, though incorporated or

registered outside the Island, carries on busi-ness or has an office or place of businesstherein;construction day means th e day determined undersection 4 as being the day on or before which itis intended to commence to construct the petro-leum refinery to which the application relates;customs laws shall have the same meaning as inth e Customs Act;operational date means the date declared pursuantto subsection (2) of section 3;

company means-

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4 P E T R O L E U M REFINING INDUSTRY(ENCOURAGEMENT)

Approvalot companyas recog-nizedrefineref oil.

petroleum refinery or refinery means the site andbuildings and other structures thereon describedas constituting a petroleum refinery;

recognized refiner of oil means a company recog-nized by the Minister under section 3 for thepurpose of operating a petroleum refinery;relevant refinery used in relation to any rocognizedrefiner of oil means the petroleum refinery in

relation to which a company has been approvedunder section 3 to be a recognized refiner of oil.3.-(1) Th e Min ister may on an application made pur-suant to section 4, by order, approve a company whichis operating or proposes to operate a petroleum refinery asa recognized refiner of oil for the purposes of this Act ifhe is satisfied-

(a) that the operation of the refinery is or will be ofbenefit to the Island, both economic and non-econom ic considerations being taken into account;(b ) that the company-

is adequately financed;has adequately trained personnel in itsemploy or is able to obtain the services ofsuch personnel;has access to the necessary technicalinformation;is able to obtain adequate raw materials;an dpossesses or will possess the necessarypetroleum refinery.

(2) The making of any such order shall be subject tosuch terms and conditions as the Minister may think fitand every order made under subsection (1) shall-[The inclusion d his page is authmized byL.N. 0119931


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PETROLEUM REFINING INDUSTRY( E N C O U R A G E M E N T )

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(a) specify the site of the refinery in respect of whichthe concessions specified in Parts 11, 111, and IVmay be granted;

( b ) specify the relevant statutory period for the pur-poses of sections 5 and 6; and(c) declare a date to be the date (in this Act referredto as the operational date) on which as respects

the relevant refinery commercial operations aredeemed to begin for the purposes of this Act.

(3 ) On the application of a recognized refiner of oil,the Minister may, upon such conditions as he may think fit,amend an order made under subsection (1) in respect of thesite of the petroleum refinery specified therein, if theMinister is satisfied that it is necessary in order to pro-mote the operation of the refinery,by the recognized refinerof oil that the site of the refinery in respect of which theorder was made shall be varied; and such amendment shallspecify the site of the refinery in respect of which the con-cessions provided in Parts 11, 111 and IV may be grantedafter the amendment has been made.

(4) On the application of a recognized refiner of oilor where commercial operations have begun prior to theoperational date specified in the order on his own initia-tive the Minister may, in his discretion, and upon suchconditions as he thinks fit, amend the order made underthis section in respect of the operational date specifiedtherein; and thereupon the provisions of this Act shall,subject to any conditions specified in relation to suchamendment, have effect as if for the operational datedeclared pursuant to subsection (2) there were substitutedthe operational date as amended.

(5) Subject to subsections (3) and (4) any order madeunder subsection (1) shall, unless previously revoked in

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6 PETROLEUM REFINING INDUSTRY( EN CO U RAG EM EN T )

accordance with the provisions of this Act, remain in forcefor such period as may be specified in the order.Applica-approval.

4.-(1) An application for the approval of a company asa recognized refiner of oil shall be addressed to the Minister.

(2) Every application under subsection (1 ) shall bein writing and shall-

tion fo r

specify the site on which there is or it is proposedto establish the petroleum refinery in respect ofwhich the application is made;in the case of a petroleum refinery to be estab-lished, specify a provisional construction daywhich shall not be later than twelve months afterthe date of the granting of the application;specify the class or classes of petroleum productsmanufactured or intended to be manufactured atthe refinery;propose a date which the Minister may considerin determining the date to be declared as theoperational date in the relevant order to be madeunder section 3; andcontain such other particulars and be in suchform as msy be prescribed.(3) At any time after the granting of its applica-

tion and before the day specified in such application asthe provisional construction day, the recognized refiner ofoil may apply to the Minister for the declaration of someother day whether earlier than or subsequent to theprovisional construction day, as may be agreed uponbetween the refiner and the Minister, to be the construc-tion day, and the Minister shall act accordingly.

Where no application is made in accordance with thissubsection or where an application is made but no agree-



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PETROLEUM REFINIhG INDUSTR Y(ENCOURAGEMENT)

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ment is reached between the refiner and the Minister theprovisional construction day shall be deemed to be theconstruction day.

PARTI. Concessions in respect of customs duty and 16/1991S. 64.generaI consumption tax5.-(1) Every recognized refiner of oil or any person Reliefauthorized by the refiner in writing so to do (hereinafter :Ems

referred to as an approved agent) shall be entitled to dutyandimport into Jamaica, during the relevant statutory period, cmsumlpany of the articles specified in the S chedule free of customs 16/1991duty and general consumption tax if the refiner or approved S . 64.agent, as the case may be, satisfies the Commissioner of Schedule.Customs and Excise that such articles are imported for the s .64 .construction, operation, a lteration, reconstruction, extension gL ! 9 8 5or repair of the relevant refinery or for equipping suchrefinery.

(2) For the purposes of this section and of section 6the relevant statutory period in relation to any petroleumrefinery shall be the period stated as such in the orderunder section 3 approving a company as a recognizedrefinery or for equipping such refinery.

generaltion tax.

1611991

6.-(1) Every recognized refiner of oil may during the Relieffromcustomsrelevant statutory period import into Jamaica for use in dutyandthe man ufacture of p etroleum products a t the relevant consumpeneralrefinery free from customs duty and general consumption z;ezd(2) In this section specified raw material means material.

tax any specified raw material. ofspecifiedraw16/1991crude petroleum, feed stocks, blends, additives, chemicals, S.a.catalysts and other substances used in the manufacture,processing, blending and packaging operations of therelevant refinery.

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Specialprovisionsreld tinp toarticlesimportedfree.1211985Sch.1611991s.64.12 / 1985Sch.

12/1985Sch.

1211985soh.

PETROLEUM REFINING INDUSTRY(ENCOURAGEMENT)

7 . 4 1 ) Every recognized refiner of oil or approved agentwho imports into Jamaica any article free of customs dutyand general consum ption tax under the provisions of section5 or section 6 , as the case may be, shall, upo n being requiredso to do by the Com missioner of Customs an d Excise-

(a) keep such record in such form and containingsuch particulars as may be required by theCommissioner of Customs and Excise of th e ar-ticles so imported;(b ) cause such articles to be marked with such markand in such manner as may be required by theCommissioner of Customs an d Excise; a nd

(c ) permit the Commissioner of Customs and Exciseor any person authorized by him in writing so todo at all reasonable times to inspect such recordand to have access to any refinery, warehouse orother premises under the control of the r e h e r orapproved agent, as the case may be, for thepurposes of exam ining any such articles which theCom missioner of Customs and Excise may believeto be therein or of satisfying himself of the accu-racy of the particulars in relation to such articlescontained in such record.(2) Every recognized refiner of oil who contravenesthe provisions o f subsection (1) and every director, manage r,agent, officer and servant of the company who is know-ingly a party to the contravention shall be guilty of anoffence and on summary conviction before a ResidentMagistrate shall be liable to a fine not exceeding onethousand do llars and, in default of paym ent, every such

director, manager, agent, officer or servant shall be liableto be imprisoned for a term not exceeding twelve months.(3) Every approved agent who contravenes the pro-visions of subsection (1) shall be guilty of an offence and

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on summary conviction before a Resident Magistrate shallbe liable to a fine not exceeding one thousand dollars andin default of payment shall be liable to be imprisoned fora term not exceeding twelve months.

8.-(1) NO article imported into Jamaica by any Restrictionrecognized refiner of oil or approved agent, free of positionofcustoms duty and general consumption tax under the pro- articlesvisions of this Act shall be sold, given away or otherwise free.6/1991disposed of or used for purposes other than those specified S.in subsection (1) of section 5 or in subsection (1) of section 6by the refiner or approved agent, as the case may be,except-

(a) in the case of an assignment of the petroleumrefinery for the purposes of which such articlewas imported into Jamaica to the assignee of suchrefinery; or( b ) upon such refiner or approved agent paying orgiving security to the satisfaction of the Commis- n / m ssioner of Customs and Excise for the payment ofan amount equivalent to the amount of customsduty and general consumption tax which would 16/1991have been payable upon the importation of sucharticle but for the provisions of this Act, if thevalue of such article at the time it is sold, givenaway or otherwise disposed of or used for purposesother than those specified in subsection (1) ofsection 5 or in subsection (1) of section 6 , as thecase may be, were substituted for its value at thetime of importation; or

(c) after the expiration of five years from the dateof importation into Jamaica of such article.(2) Every recognized refiner of oil who contravenesthe provisions of subsection (1) and every director, manager,agent, officer and servant of the company who is know-

upon dis-imported

s. 64.

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10 PETROLEUM R E F I N I N G I N D U S T R Y(ENCOURAGEMENT)

ingly a party to the contravention shall be liable to apenalty of three times the va lue of the article in respectof the disposal or use of which the contravention occurredor two hundred dollars whichever is greater and in defaultof payment, every such director, manager, agent, officer orservant shall be liable to be imprisoned for a term notexceeding twelve months.

(3) Every approved agent who contravenes the pro-visions of subsection (1) shall be liable to a pendty of threetimes the value of the article in respect of the disposalor use of which the contravention occurred or two hundreddollars whichever is greater and in default of payment tobe imprisoned for any term not exceeding twelve months.

PARTHI. Concessions in respect of income taxDefinitionappi-cation. 9.-(1) In this Part unless the context otherwise requires,income tax means the tax payable by companies underthe Income Tax Act.

(2) Nothing in this Act shall affect any liabilityto income tax incurred by a recognized refiner of oil inrespect of profits made prio r to the com mencem ent of thetax exemption period specified in section 10.(3 ) Notwithstanding anything in this Act relatingto income tax a recognized refiner of oil shall not beentitled to initial or investment allowances in respect ofassets acquired prior to or during the tax exemption periodspecified in section 10.(4) Th e provisions of section 99 of the Income TaxAct, shall apply to any false statement made or any

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PETROLEUM REF'ZNZNG ZND USTRY(ENCO URAGEMEN73

to income tax or profits or gains chargeable under theIncome Tax Act.10.-41) Subject to the provisions of this Act a recog- Rrlizftiomnized refiner of oil shall be entitled to the following reliefs

from income tax, as respects the relevant refinery that is tosay-(a) relief from income tax for a period (in this Actreferred to as the "tax exemption period") fiomthe operational date until the expiration of the

period of seven years next after the first dayof January in the calendar year following theoperational date in respect of profits or gainsobtained fiom the operation of the refinery;(b) after the expiration of the tax exemption periodspecified in paragraph (a) a recognized refiner ofoil may for the purpose of the assessment of in-come tax in respect of the next succeeding sixyears of assessment carry forward net losses (leavingout of account depreciation, wear and tear or

initial or investment allowances) which were in-curred during the tax exemption period aforesaidtaking the operations of the refinery during thatperiod as a whole;

(c ) for the purpose of assessment of income tax anyexpenditure made by the refiner on or after thedate on which the relevant order was made undersubsection (1) of section 3 approving the companyas a recognized refiner of oil but prior to the


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PETROLI?'UM KEII7NING INDUSTRY{ENCOURAGEMENT)(4 prior to and during the tax exemption period

annual allowances shall not be made, but afterthe expiration of that period annual allowancesmay be made at the approved rate upon theoriginal cost of the assets as respects assets pur-chased and used prior to the date of the expirationof the tax exemption period.

(2) For the avoidance of doubt it is hereby declaredthat the provisions of subsection (1) of section 40 of theIncome Tax Act, relating to the deduction of incometax from payments made to non-residents, shall not apply topayments (not being interest of money) made by a recog-nized refiner of oil to any associated company in respectof technical, financial, accounting, research, managementand other similar services rendered by such company inthe operation of the relevant refinery.

(3 ) In this section-"associated company" refers to a company which either

controls the recognized refiner of oil or is undercommon control with such refiner;

"control" has the meaning assigned to it in subsection(1) of section 2 of the Income Tax Act;"original cost" means the net figure after deducting fromthe cost price any sale, insurance, salvage orcompensation moneys, or any grants, subsidies orother payments received from third parties on accountof such price.

Dividends. 11 . - 41 ) During the tax exemption period a recognizedrefiner of oil shall place in a separate account all profitsor gains which have been relieved of income tax in


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PETROLEUM REFINING INDUSTRY(ENCOURAGEMENT)the said profits or gains, such dividend shall be paid o ut of suchaccount.

L.X.(2) Unless, pursuant to section 37 of the Income Tax 1651,999.Act, the Commissioner of Taxpayer Audit and Assessmentotherwise authorizes, income tax shall be deducted by arecognized refiner of oil which pays any dividend pursuant tosubsection (1) as if such dividend had been paid ou t of profits o rgains within th e meaning of the provisions of the law relating toincome tax a s regards the deduction o f tax by a company on th epayment o f a dividend by that com pany.

(3) A recognized refiner of oil making deductionsof income tax pursuant to subsection (2) shall be deemedto be collecting income tax on behalf of the Commissioner i:i985of Inland Revenue and shall pay to the Commissioner ofInland Revenue or to such person as he may direct theamounts so deducted.(4) Save as is otherwise provided in this Part theprovisions of the law relating to income tax with respectto the deduction of income tax from dividends and ther e h n d of income tax to shareholders shall apply t odividends paid by a recognized refiner of oil pursuant tosubsection (1).

(5) A shareholder to whom a dividend is paidpursuant to subsection (1) whether such payment is madeduring the tax exemption period or afier the expirationthereof shall be exempt from income tax in respectthereof if such shareholder is not resident in the Islandand is not liable to income tax as respects that dividend

1 in the country o f residence.For th e purposes of this subsection where th e shareholder is a


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Commissionerof TaxpayerAudit andh s e s s me n tempowered toissueceriificatesregardingconcessionsgranted underthe Ad.


12. Notwithstanding the provisions of section 4 of theIncome Tax Act, it shall be lawful for the Commis-sioner of Taxpayer Audit and Assessment to certify in suchform as may be prescribed the concessions granted to arecognized refiner of oil under the provisions of this Actin order that such certificate may be produced by suchrefiner to the fiscal authorities of any other country in whichsuch refiner may be liable to taxation.

PART IV . Other coiicessioi~s. h s ~s ta n c z to 13.--(I) Subject to the provisions of this Act and to therzcognized

of oil satisfaction of such requirements as to proof or otherwise a s maybe prescribed there shall, out of moneys provided for thepurpose in the Estimates of the Island, be paid to a recognizedrefiner of oil in respect of petroleum products manufactured andsold by such refiner for consumption in the Island on or after theopera tional date, assistance at the prescribed rates.

(2) All claims for the payment of assistance shallbe made to, and determined by, the Minister in accordancewith regulations made under this Act, and any decisionof the Minister given in respect to, or in connection with,any such claim shall be final and conclusive.

(3) If it is found at any time that any recognized


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PETROLEUM REFINING INDUSTRY( E N C O U R A G E M E N T )

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criminal liability, if any, of such refiner, be recovered ina Resident Magistrates Court by the Attorney-General asa civil debt.

14. If it appears to the Minister that a recognized Powerofrefiner of oil has contravened any provisions of this Act withholdor of any regulations made thereunder he may withhold assistance.payment of any assistance payable to such refiner until heis satisfied that the provisions have been complied with,or where compliance with the provisions will not makegood any default or deficiency arising by way of the con-travention, that the default or deficiency has been or willbe made good as far as possible.

Minister to

PARTV. Miscellaneous15. Nothing in this Act shall exempt a recognized Savings.

refiner of oil from making any return to the Commissionerof Inland Revenue or from complying with the law relating L.N.to income tax in any other respect so as to establish theliability, if any, of such refiner to income tax nor fromcomplying with the law relating to the collection ofcustoms duties so as to establish the liability, if any, of therefiner to customs duties.

165/1999.

16.41) Subject to the provisions of subsection (3), no ~estrict ionpetroleum refinery in respect of which concessions under m o l e u mPart II have been granted, whether such refinery is stillbeing used for the manufacture of petroleum products ornot, shall, without the prior approval of the Minister, beused at any time within ten years from the date declaredby an order made under section 3 to be the operational dateas respects such refinery, for any other purposes than those

on us e of



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16 PETROLEUM REFINING INDUSTRY( E N C O U R A G E M E N T )

1211985Sch.

Power orevokeorderapprovingcompanyas arecognizedrefinerof oil.

of the manufacture of petroleum products by a recognizedrefiner of oil:Provided that the Minister may, as a condition for thegrant of his consent, require that all the sums, or as hemay think fit, any p art of such sums which but for theprovisions of Part I1 would have been payable as cus-toms duty on the importation of any articles used in theconstruction, operation, alteration, reconstruction, exten-sion or equipping of such refinery shall be paid to theCommissioner of Customs and Excise.

(2 ) Any person using, or permitting another personto use, any such refinery in contravention of the provisionsof subsec tion (1) shall be guilty of an offence and on sum-mary conviction before a Resident Magistrate shall beliable to a fine not exceeding two hundred dollars and indefault of payment to imprisonment for a term notexceeding six mo nths and in the case of a continu ingoffence to a further fine of one hundred dollars in respectof each day during which the offence continues.

(3) The provisions of this section shall not applyto any refinery which has ceased to be used for the manu-facture of petroleum products by a recognized refiner ofoil if the sums which bu t for the provisions of section 5would have been payable as customs duty on the importa-tion of any articles for the construction, opera tion, altera-tion, reconstruction, extension or repair of the refinery orfor equipping such premises have been paid.17. W here any recognized refiner of oil-

(a) fails or neglects-(i) to commence to construct the refinery inrelation to which he is a recognized refiner

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of oil, on or before the construction day;or(ii) to commence to manufacture petroleumproducts in marketable quantities at suchrefinery on or before the operational date;or

( b ) in fact fails to fulfil any of the criteria set out inparagraph (b)of subsection (1) of section 3,the Minister, if satisfied that having regard to the circum-stances of the case it is expedient so to do, may revoke therelevant order which was made under subsection (1) ofsection 3 and thereupon the provisions of this Act shallcease to apply to the company concerned in respect of thatrefinery but without prejudice to any liability which wasincurred by such company under the provisions of this Actprior to the revocation of the order.

18.-( 1) The Minister may make regulations generally Regula-tions.for giving effect to the provisions of this Act.(2) In particular and without prejudice to the

generality of the provisions of subsection (1) the Ministermay make regulations in regard to-

(a ) any matters required by this Act to be prescribed;(b) the adjustment of profits and gains, including

the adjustment of allowances and carrying for-ward of losses, when a company was at the timethat it became a recognized refiner of oil alreadyengaged in business;

(c ) any other matter or thing, whether similar to theforegoing or not, in respect of which it may beexpedient to make regulations for the purposeof carrying this Act into effect.

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18 PETROLEUM REFINING INDUSTRY(ENCOURAGEMENT)(3) All regulations made by the Minister under this

section shall be subject to negative resolution of the Houseof Representatives.Power toremove

19. The Minister may by order from time to time addadd to orfromSchedule.

to or remove from the Schedule any article.

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SCHEDULE (Sections 5 (1) and 19)Materials, machinery and equipment with their accessories andspare parts necessary for the construction, operation, alteration,reconstruction, extension or repair of the refinery or for equippingsuch refinery including-

(i) tugs and barges;(ii) pipelines and other transmission and transportation facilities;(iii) motor vehicles not intended to be and in no circumstancesused upon a public road save with the permission in writingof the Minister responsible for works and not required to be

licensed under the Road Traffic Act.

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Petroleum Refining Industry Encouragement) Act

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Transcript of Petroleum Refining Industry Encouragement) Act