St. Kitts and Nevis: Direct Corporate Taxation

There is no net worth tax, gift tax, turnover tax, or estate duty on St Kitts and Nevis. Corporate Income Tax and Withholding Tax apply to domestic companies, but not to entities carrying on business solely with non-residents of the Federation. See Offshore Legal And Tax Regimes for details.

A 5% tax on telecommunications was extended to internal calls in addition to international calls in November 2005. Citing increased social costs as a result of the shut-down of the sugar industry, Prime Minister and Minister of Finance Denzil Douglas announced in the 2007 budget a 15% excise duty on alcohol and tobacco products, and an increase in the existing Social Services Levy from 10% to 12% on salaries in excess of ECD8,000 monthly.

Douglas also said in the 2007 budget that income tax legislation would be amended to require companies to pay taxes at the same time as filing their tax returns; currently they have three months in which to pay. "This does not allow the Government to manage its cash flow in an effective manner. Therefore in order to address this issue the Income Tax legislation will be amended to allow for self-assessment and for payment to be made on the date of filing," said the Prime Minister.

A system of value-added tax came into force on November 1, 2010. In the 2008 budget, Douglas announced a review of the jurisdiction's tax system, and revealed that the government was exploring the merits of introducing a system of value-added tax. The standard VAT rate is 17%, with bread, flour, fuel, infant formula and a number of other items zero-rated. A 10% rate applies to hotels, restaurants and tour operators. Exemptions apply to articles, books, education services and several other items/services.

The VAT consolidates a wide range of taxes including Consumption Tax, Mercantile Tax, Traders Tax, Hotel Room Tax, Island Enhancement Fund, Travel Tax, Insurance Premium Fee, Parcel Tax, Vehicle Rental Tax, Overseas Call and Telecommunication Tax, Export Duty and Rum Duty.

In April 2008, the Nevis Island Assembly approved new property tax legislation entitled the Nevis Property Tax Ordinance 2007. This historic Ordinance modernises the valuation property taxes of Nevis through the introduction of market value as the validation standard for most properties on the island. It will be payable by both local and foreign property owners.

It was announced in Februarty 2009 that small hotel owners in St Kitts are to benefit from a Special Incentive Package agreed with Prime Minister and Minister of Tourism, Denzil Douglas. The package will allow tax concessions in exchange for their commitment to maintaining certain environmental and quality standards.

The small hotels will get a waiver of import duty and consumption tax on fixtures, furniture, appliances and equipment imported for use in refurbishment projects. Energy saving equipment is also treated as refurbishment and will incur the 12% customs service charge only. Small hotels with restaurant facilities will also be allowed to import food and wine duty free (a waiver of import duty and consumption tax with a 12% customs service charge payable). However the facility is not extended to sodas (carbonated beverages), beer and liquor.

The agreement requires the hoteliers to increase their energy efficiency by adopting energy saving practices and maintain their physical facilities to at least the minimum acceptable level of industry related standards.

Small hotels are defined as having more than ten rooms but less than 99 rooms.

In October 2011 the government passed the Amenities for Tourists (Amendment) Ordinance which introduces a 2% bed tax for all guest houses, hotels and villas. The Ordinance also provides for a 2% tax on all meals and drinks served in restaurants. The Ordinance is part of increased efforts by the government to reduce its debt and meet IMF stipulations linked to the USD84mio. standby arrangement agreed in September 2011.

In April 2009 St Kitts and Nevis Minister of Finance, Timothy Harris announced the introduction of a tax amnesty which would allow taxpayers until September 30, 2009, to settle outstanding debts, as outlined in the 2009 budget. The tax amnesty was offered to both registered and unregistered taxpayers and was taken up by more than 350 businesses and individuals.

The group of 18 taxes to which the amnesty applied comprised of Corporate Income Tax; Traders Tax; Consumption Tax on Services; Hotel Room and Restaurant Tax; Insurance Premium Tax; Gaming Machine Tax; Insurance Registration Fee; Travel Tax; Vehicle Rental Levy; Island Enhancement Levy; Withholding Tax; Property Tax; Tax on Lottery Proceeds; Business and Occupation Licence; Radio Licence; Telecom Services Licence; and Insurance Licence.

St. Kitts and Nevis Corporate Income Tax

Corporate Income Tax has been reduced in the last few years from 40% to 38% and now to 35%. Many businesses may qualify for development and tax concessions under the fiscal incentives act.

Taxation is based on financial statements adjusted for inflation. Royalties, exchange losses and interest paid to foreign affiliates are fully deductible without restrictions. A minimum tax on assets has been established, which is equivalent to two percent of net assets adjusted for inflation. The base to calculate business equity now does exclude 50 percent of debts to bank and creditors.

St. Kitts and Nevis Capital Gains Tax

There is a capital gains tax of 20% on profits or gains derived from a transaction relating to assets located in the Federation which are disposed of within one year of the date of their acquisition.

St. Kitts and Nevis Withholding Tax

Individuals and ordinary companies remitting payments to persons outside of the Federation must deduct 10% withholding tax from profits, administration, management or head office expenses, technical service fees, accounting and audit expenses, royalties, non-life insurance premiums and rent.

St. Kitts and Nevis Property Taxes

The following is the land tax schedule for St. Kitts and Nevis (showing the tax rate as US Dollars per acre):

In Special Development Areas, such as the South East Peninsula on St. Kitts, there is a tax of 0.5% of the assessed market value of the land, or land and improvements.

A house tax is charged at the rate of 5% of the annual gross rental value for residences in St. Kitts or Nevis with a 25% rebate for properties that are occupied by their owner solely as residence. The minimum annual rental value is XCD 600 (USD 222) in St. Kitts and XCD 48 (USD 18) in Nevis.

St. Kitts and Nevis Import Taxes

St. Kitts and Nevis has adopted the common external tariff of CARICOM which ranges from 5% to 20%. In addition, the government imposes a stamp tax of 2% on imports as well as a 3% Customs Service charge.