The term ‘permanent establishment’ (PE) is not defined under the tax laws of St. Kitts and Nevis.

However, the guidance issued by the Inland Revenue Department on tax residence and taxable presence provides that in the absence of specific PE provisions in the domestic law, a non-resident company will have a taxable presence in St. Kitts and Nevis if it has a trade or business in the country.

Further, the guidance uses the term “business enterprise” as defined under the CARICOM double taxation agreement as an equivalent of the concept of a permanent establishment to determine the taxable presence of a non-resident company in St. Kitts and Nevis. Whilst this definition provides clarity to taxpayers, it must not be considered as a prescriptive or exclusive definition.

As per the guidance, a business enterprise is defined as an entity carrying on business or trading physically at a place within the country for the purpose of earning profit. It includes and is not limited to the following:

An office, branch, place of business or seat of management;
A factory, plant, industrial workshop or assembly shop;
A construction project in progress;
An agency or premises for the purchase and sale of goods; and
An agent or representative.

However, the following activities do not constitute a business enterprise in St. Kitts and Nevis

Actions undertaken to ensure that the company complies with its corporate requirements in St. Kitts and Nevis;
Establishment of a bank account in St. Kitts and Nevis; and
Investment in equity holdings in St. Kitts and Nevis.

Further, to qualify as a business enterprise an agent must carry out core functions of the business on behalf of the non-resident company in St. Kitts and Nevis and not merely corporate secretarial, shareholder stewardship, or other administrative functions.

An employee travelling to St. Kitts and Nevis is considered as an agent only if he makes sales in the country and has the capacity and authority to legally bind the non-resident company on its behalf.

Further, the domestic law provides that where a non-resident person engages in business with a resident, and it appears to the Comptroller that owing to the close connection between the resident person and the non-resident person and to the substantial control exercised by the non-resident person over the resident person, the course of business between those persons can be so arranged and is so arranged that the business done by the resident person in pursuance of his or her connection with the non-resident person produces to the resident person either no profits or less than the ordinary profits which might be expected to arise from that business, the non-resident person shall be assessable and chargeable to tax in the name of the resident person as if the resident person were an agent of the non-resident person.

Powerful Tax Solutions

Tax Rules Engine

Collaboration Tools

Latest Tax News