St. Kitts and Nevis: Personal Taxation

There is no personal income tax in Kitts and St Nevis, but foreign nationals working in the country are required to obtain a work permit for which there is an annual charge of, at the time of writing, ECD1,500 (USD635).

From January 2011, employed individuals earning between ECD1,000 and ECD6,500 pay 3.5% (3% previously) of gross wages as social security contriubtions. Those earning between ECD6,500 and ECD8,000 pay 10% (8% previously), and income over ECD8,000 is subject to contributions of 12% (10% previously).

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. 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 Fee, Export Duty and Rum Duty.

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.

The group of 18 taxes to which the amnesty applied was 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.

Pointing to the methodology that was being adopted, he explained that the government was offering taxpayers with arrears the opportunity to pay off their taxes without interest and any penalties.

“Where the payment is not completed within the amnesty period but in any event on or before December 30, 2009, then the taxpayers will benefit from a 70% waiver of interest due and payable and a 70% waiver of penalties. Where arrears are paid off between October 1 and December 31, 2009, the payment arrangement or payment plan must have been made before September 30, 2009 to qualify for the 70% waiver,” added Harris.

Taxpayers, wanting to take advantage of this limited time offer, could visit the Inland Revenue Department to verify their tax balances. Taxpayers living abroad were also encouraged to submit their requests, in writing, to the Inland Revenue Department, in order to be considered under the amnesty programme. Alternatively, overseas based taxpayers could authorize a representative residing in the federation, to act on their behalf, noted the government.

“The government believes that this amnesty is a good idea for all taxpayers, as it provides those in arrears with significant savings by means of eliminating the payment of interest and penalties. It will also bring to the fore and legitimise those individuals and entities that can be classified as tax delinquents and evaders. It certainly will go a long way in ensuring a balanced playing field, as well as a widening of the tax net, which over time will yield improved revenue intake and thereby reduce the likelihood of tax increases.”

Harris added that the introduction of the tax amnesty marked a gesture of goodwill on the part of the government that lightened the burden of taxpayers in arrears, and one that gave non-compliers the unforced opportunity to operate as required under the law.

He encouraged all affected parties to take advantage of this one-time tax initiative amnesty.

“Doing so will remove the need for the aggressive enforcement of recovery procedures as prescribed in the Tax Administration and Procedures Act of 2003. This will lead to a more harmonious atmosphere of tax relationships, between taxpayers and the Inland Revenue Department, through co-operative compliance mechanisms,” concluded Harris.

Over 350 businesses and individuals took up the amnesty offer.

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 ECD600 (USD222) in St. Kitts and ECD48 (USD18) 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.