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St. Kitts & Nevis
St. Kitts & Nevis Tax Regime
The Federation of Saint Kitts and Nevis (SKN) also known as the Federation of Saint Christopher and Nevis, is a two-island country in the West Indies. Located in the Leeward Islands chain of the Lesser Antilles, it is the smallest sovereign state in the Americas. The country is a Commonwealth realm, with the British Monarch (currently, Elizabeth II) as its head of state.
The economy is characterized by its dominant tourism, agriculture and light manufacturing industries.
CITIZENSHIP BY INVESTMENT PROGRAMME
Persons desirous of becoming a citizen of SKN can do so by investing in an approved real estate development or contributes to a public charity under the Citizenship by Investment Programme.
ST. KITTS & NEVIS TAXES
Income Tax – Individuals
SKN does not charge taxes on personal income.
An employer is required to register with the Social Security Board (SSB) and to make payments of contributions to the Social Security Fund on behalf of the employee. It is also the responsibility of the employer to make sure that the employee is registered with the SSB.
(i) Housing and social development levy
- 3.5% on income over XCD 1,386.67 up to 6,500
- 10% on income between XCD 6,500 and 8,000
- 12% on income over XCD 8,000
(ii) Employee Injury Benefit and Severance Payment Fund
- Employees do not contribute
The employer contributes the following amounts of the employee’s earnings:
- 3% for housing and social development levy
- 1% for employee injury benefits
- 5% for social security
- 1% for severance payments contributions
Resident Companies are taxed on worldwide income. Companies are deemed to be resident in SKN if it is incorporated in SKN, is centrally managed or controlled in SKN or registers an external company.
Corporation tax is assessed for each year of assessment upon the total assessable income at a rate of 33% on profits after deducting expenses wholly and exclusively incurred in the production of the income and specific allowances/deductions which the legislation allow.
Payment of Tax
Quarterly installments of taxes are due and payable to the Inland Revenue Department on 15 March, 15 June, 15 September and 15 December. Any balance owing on an Income is due on the filing deadline of the tax return.
Interest on late payments is charged at the rate of twelve percent (12%) per annum. Interest charges commence on the original due date of the tax return. The penalty for late filing of a return is five percent (5%) of the tax owing and an additional one percent (1%) for each month or part of the month during which the return remains outstanding.
Companies are required to file a corporation tax return 15th of fourth month following the company’s year end.
Tax losses maybe carried forward for up to 5 years and cannot be carried back. Only 50% of losses can be offset against taxable profits in each income year.
Foreign Tax Credits
Credits are granted only where the tax is paid in a British Commonwealth country who also grants relief to SKN.
Unincorporated Business Tax (UBT)
Unincorporated persons carrying on business in SKN are required to register and pay UBT on income.
The rate of tax is 4% on:
- monthly receipts from the supply of goods greater than XCD 12,501
- monthly receipts from the supply of services greater than XCD 2,001.
Island Enhancement Fund
The charge is levied on businesses operating in the tourism sector. The rates are as follows:
• Vehicle rentals, Tour and other activities – XCD $4 by the total number of rentals per day/per passenger
• Passengers arriving from jurisdictions outside SKN – XCD $13.50 per person
This tax applies to a few goods which include petroleum products, alcoholic beverages and firearms.
The rate of tax ranges between 5% and 25%.
Withholding tax is charged on payments made to non-residents and is due to be paid and WHT formed filed within 15 days after the payment is made.
The standard rate of WHT is 10% and may be varied where there is a double tax treaty. Treaties in force are:
- San Marino
Note: The government of SKN have announced its intention to increase the rate of WHT to 15%, however the Bill has not yet been finalised.
Stamp duty applies on the transfer of shares and real property and is payable by the seller.
• transfer of shares is 2%;
• transfer of real property can range from 2% to 18.5% and is based on the consideration paid and/or property location.
Capital Gains Tax
Capital gains are not taxable in SKN unless the asset is purchased and sold within the same 12 month period.
Property Tax is based on the market value of real property.
The tax rates in SKN are based on the use of the property as stated below:
Ω Exemption on construction of a new residence for one year
When constructing a new residence, individual taxpayers are allowed a one (1) year exemption from the payment of Property Tax from the date of completion. This relief is a concession allowed on newly constructed residential properties only.
Value Added Tax (VAT)
VAT is charged on:
- the sale of goods or services within SKN; and
- on the import of goods
Key points to note:
• The standard rate is 17%
• Reduced rate of 10% for the Tourism Sector
• Certain goods and services may also be zero-rated or exempt.
• The registration threshold is one hundred and fifty thousand dollars (XCD 150,000) for businesses and ninety six thousand dollars (XCD 96,000) for certain professional services.
• Monthly VAT Returns must be filed with the SKN IRD within 15 days at the end of each calendar month.
• The late payment penalty is 10% of the tax and interest is 1.25% monthly
• Penalty for late filing is 100 XCD per month
VAT Reverse-charge: The VAT legislation of SKN includes a provision for a VAT reverse charge on the import of services other than an exempt import into SKN.
The information on this page is provided as at August 11th, 2016, and is provided for information purposes only. It is not intended to be relied upon for specific tax and/or business advice and as such, readers are encouraged to consult with professional advisors on specific matters prior to making any decision.
Should you require tax advice, please contact us and we shall be happy to make a referral to a local tax practitioner.