Taxation of Offshore Entities

General Information

There is an exemption of offshore companies from social security, gift, estate and succession taxes. Qualified local/domestic companies doing business here are also granted tax holidays, concessions and exemptions under the Fiscal Incentives Act.

Tax Treatment of Offshore Operations

Whether under Federation legislation or Nevisian legislation, offshore entities in both Saint 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 in certain designated projects 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.

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 there is an annual charge of 3,500 East Caribbean dollars (US$). 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 10% of the value of the land, payable by the purchaser, on all purchases except certain designated projects. A 1% sales tax on gross sales, a hotel tax of 5% and a 2% tax on foreign currency transfers are in effect.

Source: lowtax.net