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St Kitts and Nevis is increasingly popular among entrepreneurs seeking favourable tax conditions. The Caribbean nation’s tax incentives, coupled with the St Kitts Citizenship by Investment program, make it an attractive destination for international businesses. Here is what you need to know about the country’s business laws, detailed by Lyle Julien, an investment program expert at Immigrant Invest.
Understanding tax residency of St Kitts and Nevis
A legal entity/company is considered a St Kitts and Nevis tax resident if it is registered there. An individual is considered a tax resident if they have resided in the country for more than 183 consecutive days, and have a registered address there.
A non-resident company is a legal entity not registered or managed in St Kitts and Nevis. Still, it must pay taxes on income made in St Kitts and Nevis, such as earned on selling goods or providing services in the country.
Double taxation avoidance agreements protect from full-rate taxes in multiple countries. St Kitts and Nevis has agreements with CARICOM.
Corporate income tax in St Kitts and Nevis
Tax resident companies in St Kitts and Nevis are subjected to the 25% corporate tax, which they pay on their global income.
Non-resident companies only pay corporate tax on income earned in St Kitts and Nevis.
The tax is due when each fiscal year ends and a deadline is within 3.5 months. For instance,
ifa fiscal year ends December 31, the deadline will be April 15. Late payments incur 12% annual interest, and late filings incur a 5% penalty plus 1% for each month delayed.
Capital gains tax is applied at 16.5% from asset sales within 1 year of acquisition.
Withholding taxes of 33% apply to dividends paid by one tax resident company to another.
VAT rates in St Kitts and Nevis
The standard VAT is 17%. It is included in product prices, but there are reduced rates for certain categories.
Reduced VAT rates in St Kitts and Nevis:
10% — hotels and restaurants;
0% — goods like bread, flour, milk, sugar, rice.
Exempt from VAT are industries like healthcare, transportations, auto, insurance, education, water, electricity.
VAT-registered businesses must file monthly returns by the 15th of the following month.
Withholding tax is not paid by tax residents as they are included in company profits. Non-tax residents pay 15% on royalties, interest, and dividends. Social contributions are 6% and are of the salary.
Benefits of launching a company in St Kitts and Nevis
Business-friendliness. St Kitts and Nevis ranks well for ease of doing business. TheI government has fast procedures for business licensing and registration. It is also aimed at attracting foreign investment. Entrepreneurs can quickly establish a business thanks to the supportive regulatory environment.
Diversity of business structures. St Kitts and Nevis offers various business structures, including sole proprietorships, partnerships, and corporations. The choice depends on the company type and business goals. Corporations benefit from limited liability and easier access to capital.
Supportive infrastructure. The country has well-developed infrastructure supporting business operations. Reliable telecommunications, modern ports, and efficient transportation networks ensure smooth business operations. Additionally, St Kitts and Nevis offers a skilled workforce.
How to become a tax resident and start a business in St Kitts and Nevis
To become a tax resident of St Kitts and Nevis, one can obtain citizenship. There is a citizenship by investment program in place: foreigners can apply via a licensed agent and establish a business after becoming citizens. The advantages of Saint Kitts passport include tax incentives for both individuals and legal entities.
Investment options of the St Kitts and Nevis citizenship program:
Non-refundable contribution — $250,000+;
Public Good Investment — $250,000+;
Real estate purchase, refundable in seven years — $400,000+.
To participate, an investor must be over 18, have no criminal records, no serious illnesses, and have legal, provable income.
The investor can add close family members to the application, including a spouse, children under 30, parents over 65, and unmarried, childless siblings under 30. Everyone but the spouse must financially depend on the investor.
Conclusion
St Kitts and Nevis has a compelling tax system for international entrepreneurs. Citizenship by Investment program is one of the ways to obtain citizenship of St Kitts and Nevis.
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