Several incentives are available to taxpayers under the Income Tax Act, Fiscal Incentives Act and the Small Business Development Act.

Investment Incentives

The Fiscal Incentives Act provides tax holiday of 10 to 15 years for approved enterprises engaged in specific manufacturing activities.

Companies Eligible for Investment Incentives are categorised as follows:

Group I enterprise – local value added is 50% or more of the amount realised from sales
Group II enterprise - local value added is 25% or more (less than 50%) of the amount realised from sales
Group III enterprise - local value added is 10% or more (less than 25%) of the amount realised from sales
Enclave enterprise - enterprise producing exclusively for export to countries other than Caribbean Community (‘CARICOM’) Member States

In determining the length of the tax holiday, the extent of local value added to approved products is considered.

Following Incentives are available:

100% corporate tax (CIT) exemption, for a period of 15 years is granted to Group I and enclave enterprises. Group II enterprises are eligible for 12 years and Group III enterprises are eligible for 10 years of tax holiday
Operating losses incurred during the tax holiday period are allowed to be carried forward (after the end of the tax holiday period) for a period of 5 years
Duty free importation of raw material, machinery, components, spare parts and other inputs used in manufacturing, subject to certain conditions
Export allowance (i.e. reduction in corporate tax) ranging from 25% - 50% (depending on total profits) of export profits is granted to companies engaged in export of approved products to specified countries, subject to certain conditions.

Sector Specific Incentives

Hotel Industry

Following incentives are available to a company licensed under Hotels Aid Ordinance for construction/ extension of hotel:

10-year corporate tax exemption on construction of hotels with more than 30 rooms
5-year corporate tax exemption on construction of hotels with less than 30 rooms
Initial or annual allowances are not allowed in the tax holiday period. Thereafter, only annual allowances are allowed for deduction
Duty-free import of building material and equipment, provided the company does not dispose of any hotel equipment for 3 years

Pioneer Industries

A 5-year corporate tax exemption is granted to a licensed pioneer manufacturer under the Pioneer Industries Act. The tax holiday period may be increased to 10 years at the discretion of the government.

Tourism Incentives

Tourism projects (including hotels, condominiums and villa developments) are eligible for following incentives:

CIT exemption for a tax holiday
Exemption from import duties for goods and materials used in construction and operation of development
Withholding tax exemptions

International Business Companies (IBC)

An IBC is a company incorporated under the Companies Act and the Nevis Business Corporation Ordinance in St. Kitts and Nevis but operates outside the country. Such companies are not permitted to do business with residents and target only non-resident customers. They are restricted from owning any real property in the country and from conducting business activities relating to banking, insurance, assurance, fund and collective investment schemes. IBCs are typically formed as holding or investment companies.

Incentives for IBCs include:

100% exemption from corporate tax and withholding taxes
No requirement for filing tax return or maintaining books of accounts
No requirement for a registered office
Incorporation within 1-2 business days

The tax exemptions for the companies that carry on business exclusively with non-residents have been abolished effective 1 January 2019. The incentives have been repealed in order to comply with harmful tax practice requirements of BEPS Action 5 and the EU non-cooperative jurisdiction list. However, companies formed on or before 31 December 2018 can claim exemptions up to 30 June 2021.

Incentives under Small Business Development Act

The Small Business Development Act provides certain incentives to small businesses, including:

Corporate tax reduction for 3 to 5 years
Customs duty exemption or reduction on import of inputs for business purpose
Customs duty exemption or reduction on import of plant, machinery, equipment, or motor vehicle imported for business purpose
Property tax reduction by up to 75%

Small businesses are defined to include businesses that meet the following criteria:

Not more than 25 employees
Net assets or paid up capital not exceeding XCD 1 million
Annual sales not exceeding XCD 2 million
Owned by St. Kitts and Nevis citizens
Ownership of control not exceeding 25% by a company whose annual turnover does not exceed XCD 2 million and net assets do not exceed XCD 1 million, or by a subsidiary of a larger company
The composition of the board of directors is not controlled by a company whose annual turnover exceeds XCD 1 million
No agreement exists for managerial or other services to persons other than St. Kitts and Nevis citizens or other CARICOM territories

Other Incentives

Approved manufacturing, agricultural, and tourist ventures are permitted to import building material and equipment free of customs duties.

Powerful Tax Solutions

Tax Rules Engine

Collaboration Tools

Latest Tax News