Nevis Tax-Efficient Regimes and Sectors

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On this Page:

- Nevis Introduction
- Nevis Forms of Offshore Operation
- Tax Treatment of Offshore Operations
- Nevis Regulation Of Banking
- Nevis Trusts
- Nevis Taxation of Foreign Employees of Offshore Operations
- Nevis Employment & Residence

Nevis Introduction

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 2002. 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. Captive insurance companies were added by the Captive Insurance Companies Act 2006.

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.

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.

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Nevis Forms of Offshore Operation

Offshore operations may take place within the following forms:

• International Business Company
• Limited Liability Company
• International Exempt Trust
• Multiform Foundations Ordinance

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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Nevis Tax Treatment of Offshore Operations

Whether under Federation legislation or Nevisian 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.

Nevis companies pay the following fees:

An International Business Company (Nevis) pays an annual fee of USD220 to the government (no annual return is required). Capital duty is USD200 based on an authorised share capital of 1,000 shares at no par value or on USD100,000 of par value shares.

A Limited Liability Company (Nevis) pays an annual registration fee of USD220 to the government.

An International Exempt Trust (Nevis) pays an annual registration fee of USD220 to the government.

A Multiform Foundation Company (Nevis) pays an annual return fee of USD220 to the government.

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Nevis Regulation of Banking

Nevis has its own Offshore Banking Ordinance 1996, which 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 certificates, 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:

• 2.5% 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;
• 1.5% 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 USD15,000;
• Government Due Diligence Fee USD600;
• Incorporation Fee USD1,400.

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Nevis Trusts

Nevis trusts are formed under the Nevis International Exempt Trust Ordinance of 1994, as amended to 2002. 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 USD25,000 bond requirement prior to the commencement of an action or proceeding against trust property.

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Nevis Taxation of Foreign Employees of Offshore Operations

There is no personal income tax in 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 in Nevis other than on short-term investments.

The Nevis Property Tax Ordinance 2007 was passed by the Nevis Island Assembly in April 2008. The Ordinance modernises the valuation property taxes of Nevis through the introduction of market value as the validation standard for most properties on the island. Under the Ordinance all property owners - foreign or local – must pay the tax.

On November 1, 2010, a 17% value-added tax replaced 12 existing taxes including the Consumption Tax, the Hotel Accommodation and restaurant Tax, the Cable TV Tax, the Vehicle Rental Levy, the Insurance Premium Tax, the Export Duty, the Public Entertainment Tax, the Lotteries Tax, the Gaming Machine Tax, the Traders Tax, the Telecommunications Levy, the Island Enhancement Fund and the Parcel Tax.

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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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