The Fiscal Incentives (Amendment) Bill, 2019, was moved in the National Assembly Friday to protect the Federation’s reputation as a responsible and cooperative tax jurisdiction, according to Prime Minister and Minister of Finance, Dr. the Honourable Timothy Harris.
According to the prime minister, the need for amendments arose after the European Union Code of Conduct Group on Business Taxation (EU CoCG) evaluated the Fiscal Incentives Act (the Act) Chapter 20.14 of the revised Laws of St. Christopher and Nevis 2009 on the basis of its tax governance criteria as potentially harmful.
The EU CoGC subsequently requested the Government of St. Kitts and Nevis make a high-level political commitment to have the potentially harmful features of the Fiscal Incentives Act abolished or amended by Dec. 31, 2019, according to the prime minister. The administration, in response, committed to conduct such a review and to amend or abolish features of the Act which do not conform.
“We have come to reinforce our commitment as a Government and as a people to act as a responsible member of the international community and to cooperate on matters of international tax governance in particular, and good governance in general. We have come to protect the reputation of St. Kitts and Nevis by ensuring the integrity of our systems and to deny participation of reprobates or illicit actors in our socioeconomic space,” said Prime Minister Harris in the National Assembly.
The three principal amendments being proposed to the Act are:
- amend the definition of an “Enclave Enterprise” in Section 2 (‘Interpretation’) of the Act to lift the requirement to “produce exclusively for export”, such that Enclave Enterprises are permitted under law to sell goods within the Common CARICOM market and in the local market;
- repeal the Export Allowance as per section 16 and the Second Schedule of the Act. A grandfathering provision is being inserted to indicate that there must be no new claimants for an Export Allowance from January 2020 and outlining that benefits to current claimants will continue up to 31st December, 2022; and
- insert a provision to declare that the rules of profit attribution, which are expressed in section 4A and 4B of the Income Tax Act apply equally to the Act.
Moving forward, Prime Minister Harris assured the Team Unity administration’s fiscal policies will always be responsible, prudent, and “will continue to work hard as part of the creation of a modern economy that will lead to an enlargement of the economic freedoms of our people.”
With full support from the Government benches, the bill was successfully passed.