St.Kitts
and Nevis offshore legislation, which
applies on both islands, includes the
Companies Act 1996 and the Trusts Act
1996. A Merchant Shipping Act and Foundation
Act were added in 2002 and 2003.
St Kitts and Nevis has however aimed primarily
at attracting industrial and tourist investment
with very tax-friendly incentive legislation
under the Fiscal Incentives Act 1974 and
the Hotel Aids Ordinance.
Nevis
emerged as an offshore jurisdiction after
enacting its Nevis Business Corporation
Ordinance in 1984, based upon American
corporate law of the state of Delaware.
Trusts are created under the Nevis International
Exempt Trust Ordinance of 1994, as amended
to September 2000. Limited Liability Companies
(LLCs) which have emerged as Nevis's star
product, are formed under the Nevis Limited
Liability Company Ordinance, 1995. Mutual
funds were added to Nevis's offshore product
range with the Nevis International Mutual
Funds Ordinance 2004.
All
offshore finance businesses in the Federation
need authorisation under the Financial
Services (Regulations) Order, 1997. This
includes deposit-taking business, investment
business, insurance business, trust business
and corporate service provision.
St Kitts and Nevis maintains a high level
of confidentiality for offshore entities
under the Confidential Relationships Act
of 1985. The Confidentiality Act safeguards
investors by prohibiting disclosure of
any information obtained in the course
of business. The law is considered to
provide the most rigid secrecy in the
Caribbean region as it applies to banks
and professionals as well as Government
officials.
St. Kitts and Nevis Forms
of Offshore Operation
Offshore operations may take place within
the following forms:
Click on any of the forms for a description
of its legal basis.
In
addition, there are free zones whose occupants
don't have to have offshore status as
such, but which offer benefits broadly
similar to those available to offshore
companies; see Investment
Incentive Schemes for details.
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St.
Kitts and Nevis Tax Treatment of Offshore
Operations
See Domestic Corporate Taxes for the general principles
of St Kitts and Nevis corporate taxation.
Whether
under Federation legislation or Nevisvian
legislation, offshore entities in St Kitts
and Nevis are exempt from Corporate Income
Tax, Withholding Tax and Capital Gains
Tax, as long as they carry on business
only with non-residents of the Federation.
However,
the various laws make it clear that an
exempt entity does not lose its tax waivers
because of certain activities within the
Federation including signing contracts
or concluding arrangements for employing
residents, purchasing goods and services,
and exercising other powers to carry on
its business such as holding directors'
and members' meetings, transacting banking
and reinsurance business, and conducting
securities transactions or serving as
adviser to Federation residents who enjoy
exempt status.
At
the time of writing, St Kitts and Nevis
companies paid the following fees:
An Exempt Private Company (St Kitts and
Nevis) pays an
annual fee of US$200 to the government
on filing of the annual return.
An International Business Company (Nevis)
pays an
annual fee of US$200 to the government
(no annual return is required). Capital
duty is US$200 based on an authorised
share capital of 1,000 shares at no par
value or on $100,000 of par value shares.
An Exempt Limited Partnership (St Kitts
and Nevis) pays an
annual registration fee of US$200 to the
government.
A Limited Liability Company (Nevis)
pays an
annual registration fee of US$220 to the
government.
A Trust (St Kitts and Nevis) pays an
annual fee of US$200 to the government
along with a statutory declaration of
exempt status.
An International Exempt Trust (Nevis)
pays an
annual registration fee of US$220 to the
government.
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St.
Kitts and Nevis Regulation Of Banking
Offshore
banking falls under the Financial Services
(Regulations) Order 1997. Nevis has its
own Offshore Banking Ordinance 1996.
Two
types of banking licenses are granted
under the Federation's 1997 Financial
Services (Regulations) Order. 'Unrestricted'
licenses require minimum financial resources
of 1,350,000 East Caribbean dollars ($500,000),
while for 'restricted' licenses the level
is only 135,000 East Caribbean dollars
($50,000).
Fees
for a banking license are: on filing of
first application (not refundable) - for
all applications, USD 1,000; on granting
or renewal of authorisation for an unrestricted
business, USD 8,000, and for a restricted
business, USD 4,000.
The
Nevis Offshore Banking Ordinance 1996
(as amended) defines offshore banking
as follows:
- Receiving
of foreign funds through the acceptance
of foreign money, deposits payable upon
receipt demand or after a fixed period
or after notice;
- The
sale or placement of foreign bonds certifcates,
notes or other debt obligations or other
securities, or
-
Any other similar activities involving
foreign money or foreign securities,
and
-
Either in whole or in part using foreign
funds so acquired for loans, advances
and investments whether in Nevis or
elsewhere.
Licences under the Banking Ordinance are
issued to eligible companies or qualified
foreign banks. An eligible company must
be a wholly owned subsidiary of a local
bank regulated by the Eastern Caribbean
Central Bank that is licensed under the
Banking Act to do business in Nevis. A
qualified foreign bank is a foreign bank
that is licensed under the Banking Act,
or is foreign bank with minimum capitalization
and assets, as prescribed by the Minister,
that is not licensed under the Banking
Act but is licensed to do domestic banking
in its jurisdiction of incorporation.
An eligible company must be incorporated
under the Companies Act as a company limited
by shares, and must have objects or business
activity restricted to offshore banking
from within Nevis. It must have at least
one director who is a citizen of St. Kitts
and Nevis with a residence in Nevis. The
minimum Authorised Capital must be at
least ECD2 Million, of which not less
than ECD1 Million has been Subscribed
and Paid Up in cash, such cash being deposited
in an account maintained by the Permanent
Secretary at the Eastern Caribbean Central
Bank.
Not
later than four months after the close
of its financial year, a licensee must
forward to the Permanent Secretary copies
of its balance sheet and profit and loss
account and the full and correct names
of the directors of the licensee. The
balance sheet and the profit and loss
account must bear on its face the certificate
of an auditor.
Nevis
offshore banks pay tax as follows:
-
2½% on all profits and gains
up to ten million dollars;
-
2% on all profits and gains in amounts
exceeding ten million dollars but not
exceeding twenty million dollars;
- 1½%
on all profits and gains in amounts
exceeding twenty million dollars but
not exceeding thirty million dollars;
and
-
1% on all profits and gains in amounts
exceeding thirty million dollars.
However,
a licensee and the Minister may enter
into an agreement determining the amount
to be paid as income tax in lieu of other
taxes on income by the licensee in respect
of the business it does from within Nevis.
The Minister may by order exempt a licensee
in respect of its business from all or
so much of any duty payable under the
Customs Act in respect of any goods imported
by the licensee in respect of its business
as the Minister deems expedient, if the
licensee in respect of its business satisfies
the Minister that the goods concerned
are not being made or manufactured in
Nevis, are essential as equipment or fixtures
for doing business from within Nevis and
are not merely goods that will be used
up or expended in the ordinary course
of business.
Where
the Minister is satisfied that a licensee
must use the services of specially qualified
persons in order to do its business effectively
from within Nevis and that it is unable
to acquire those services in Nevis, and
it is unable to retain or hire those services
from outside Nevis without special tax
benefits being made available, the Minister
may authorise an offshore benefit provision
for the employment of those specially
qualified persons, whereby a prescribed
percentage of an employee's or contractor's
salary or fees from a licensee:
- is
exempt from any duty or tax in Nevis;
-
may be paid in a foreign currency;
-
may be paid in some other prescribed
manner in another currency or otherwise.
Fees
charged by the Nevisvian government in
respect of an Offshore Banking Business
are as follows:
- Government
License Fee USD 15,000;
- Government
Due Diligence Fee 600;
- Incorporation
Fee 1,400.
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St. Kitts and Nevis Regulation Of Trusts
Like all offshore finance businesses in
the Federation, trust management companies
need authorisation under the Financial
Services (Regulations) Order, 1997. Under
the Order, applicants wishing to establish
a trust business handling both unrestricted
and restricted business must have net
assets of 540,000 east Caribbean dollars
($200,000) or its equivalent in other
currencies, reduced to 54,000 east Caribbean
dollars ($20,000) for restricted business.
The
St Kitts and Nevis Trusts Act 1996 was
a replacement for the 1961 Trustee Ordinance
modeled after the 1925 English Trusts
Act, and also contains modern asset protection
provisions.
Nevis
trusts are formed under the Nevis International
Exempt Trust Ordinance of 1994, as amended
to September 2000. The Trust Ordinance
includes special provisions to enhance
the use of Nevis as a preferred jurisdiction
for the establishment of Asset Protection
Trusts.
Nevis
trusts are exempt from all forms of taxation
and exchange controls provided that transactions
take place only with non-residents. The
trustee may be either a trust company
licensed to do business in Nevis or a
company incorporated under the Corporation
Ordinance (ie an International Business
Company). There is no registration requirement
other than for the Trust's name, name
of the Trustee and the registered office
address.
There
is a US$25,000 bond requirement prior
to the commencement of an action or proceeding
against trust property.
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St.
Kitts and Nevis Taxation of Foreign Employees
of Offshore Operations
There
is no personal income tax in St Kitts
and Nevis but foreign nationals working
in the country are required to obtain
a work permit for which, at the time of
writing, there is an annual charge of
1,500 East Caribbean dollars ($635). Persons
or companies remitting payments to persons
or companies outside of the nation must
deduct a 10% withholding tax on profits,
administration or management and head
office expenses, technical service fees,
accounting and audit expenses, royalties,
non-life insurance premiums and rents.
There
is no capital gains tax other than on
short-term investments, but the St. Kitts
and Nevis house tax of 5%, payable in
two installments a year, applies on annual
rental value of a property, with a 25%
rebate on residential property. The controversial
Alien Landowners Tax places a 14% levy
paid by buyers and 4% by sellers on residences.
Although it also applies to commercial
land, it is subject to negotiations on
a case-by-case basis. A 1% sales tax on
gross sales, a hotel tax of 5% and a 2%
tax on foreign currency transfers are
in effect.
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St.
Kitts and Nevis Employment & Residence
Work
permits are granted on application by
employers, provided that no local worker
is available, and involve the production
of a number of documents, including health
certificates.
The
Nevisian Banking Ordinance gives discretion
to the responsible Minister to reduce
taxes and other conditions for the foreign
employees of an enterprise which has had
trouble sourcing suitable labour locally.
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