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St Kitts And Nevis Budget Cuts Corporate Tax

by Phillip Morton, Investors Offshore.com

11 April 2013

The Government of the Caribbean territory Saint Kitts and Nevis has announced, in its Budget for 2013, that after a significant improvement in tax receipts last year - following on from the introduction of a value-added tax regime in 2010 - the territory will benefit from a 2% reduction in the corporate income tax rate this year.

Value-added tax (VAT) yielded XCD115m (USD42.6m) during the first full year of its implementation, representing an increase of approximately 58% over the various taxes that it replaced. Income tax receipts fell year-on-year however, by 9.5%.

Meanwhile efforts to tackle non compliance saw property tax revenues recover. Property tax receipts had dipped to XCD6.6m in 2011, from XCD7.6m a year earlier. The islands' tax authority undertook a number of initiatives including to educate taxpayers on their duty to pay property taxes, which led to an increase in the tax yield to XCD10.8m in 2012.

Local authorities anticipate that revenue receipts will rise by XCD63m in 2013, up 15.7% against 2012 levels. Revenue growth will be supported by a number of initiatives, including:

  • The implementation of new Finance Administration Regulations;
  • The completion of a draft new Corporate Income Tax Act, which will seek to close tax loopholes and modernize the regulation of local businesses;
  • The implementation of the medium-term debt management strategy;
  • The migration to the ASYCUDA World System, to improve the administration of duties from customs and trade; and,
  • Improvements to procurement management systems and public sector financial management.

In addition, from 2013, all businesses, including those that benefit from tax holidays, will be required to file tax returns.

Saint Kitts and Nevis's finances have improved dramatically in recent years under an International Monetary Fund-supported fiscal consolidation plan. Against that background, the Government has confirmed a further cut to the corporate income tax rate from 35% to 33% this year, with further guidance on the rate change forthcoming.

TAGS: compliance | Finance | tax | business | tax compliance | property tax | public sector | budget | corporation tax | tax authority | Saint Kitts and Nevis | trade | services

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