2013 Investment Climate Statement - Saint Kitts and Nevis
Openness to, and Restrictions Upon, Foreign Investment
The Government of St. Kitts and Nevis strongly encourages foreign direct investment, particularly in industries that create jobs, earn foreign currency, and have a positive impact on its citizens. The government has a number of incentive programs in place to attract foreign investment, and is home to the Eastern Caribbean Central Bank, the Eastern Caribbean Securities Exchange and the Eastern Caribbean Regulatory Commission.
The government has instituted a number of investment incentives for businesses considering the possibility of locating in St. Kitts or Nevis, encouraging both domestic and foreign private investment. Government policies provide liberal tax holidays, duty-free import of equipment and materials, and subsidies for training provided to local personnel. Foreign investors may also hold up to 100% of an investment.
All investment proposals are reviewed by the St. Kitts Investment Promotion Agency (SKIPA) to ensure that the project is consistent with the national interests and provides economic benefits to the country. St. Kitts and Nevis foreign direct investment policy is to attract FDI into the priority sectors as identified under the National Diversification Strategy. These include Financial Services, Tourism, Agriculture, Information Technology, Education Services and limited Light Manufacturing. However, investment opportunities also exist in energy and other services. Only qualified projects are granted approval to be established in St. Kitts and Nevis.
While all of these sectors are open to attracting FDI, St. Kitts and Nevis also employs a defensive posture for investments in certain sectors that are reserved for local investors. These include but are not limited to investments and trade in services such as taxi and tour operators and tour guides. Additionally, potential investors are cautioned that St. Kitts’ actual level of openness to foreign investment is limited by local expropriation practices, which could put investments at risk.
St. Kitts and Nevis is a beneficiary of the Caribbean Basin Initiative, CARIBCAN, and Lomé agreements qualifying it for trade concessions with the United States, Canada, and the European Union. St. Kitts will also soon accede to the Guyana-Brazil Partial Scope Agreement. St. Kitts and Nevis is also a member of GATT and WTO.
There are four fully developed industrial sites where production facilities can be constructed to specification and leased at nominal rates. Kittitian officials project that factory space will increase annually by 15,000 sq. ft. in St. Kitts and 5,000 sq. ft. in Nevis. The sites are managed and serviced on behalf of the Government by the Development Bank of St. Kitts and Nevis.
Foreign nationals receive the same legal protections as local citizens. The police and court systems are efficient and unbiased in commercial matters, and the government operates in an essentially transparent manner.
World Bank Doing Business
Conversion and Transfer Policies
Companies registered in St. Kitts can repatriate all profits, dividends and import capital.
There are no exchange controls in Nevis and the invoicing of foreign trade transactions may be made in any currency. Importers are not required to make prior deposits in local funds and export proceeds do not have to be surrendered to government authorities or to authorized banks. There are no controls on transfers of funds. The Government of Nevis guarantees the free transfers of profits and repatriation of capital.
Expropriation and Compensation
St. Kitts and Nevis uses eminent domain laws that allow the government to expropriate private property for the betterment of the public. There are also laws that permit the acquisition of private business, and the government claims such laws are constitutional. The concept of eminent domain and the expropriation of private property is typically governed by laws that require governments to adequately compensate owners of the expropriated property at the time of its expropriation or soon thereafter. The Government of St. Kitts and Nevis uses eminent domain to acquire private property and the law in St. Kitts and Nevis requires the government to compensate owners. In some cases, the procedure for compensation of owners favors the government valuation at the expense of the U.S. owner.
In St. Kitts and Nevis in practice, the government has often not paid compensation for private property expropriated under its eminent domain laws. However, in at least two cases the government partially paid the victims, but after years of litigation and with some aspects still outstanding and in dispute. Currently the U.S. Embassy in Bridgetown is aware of four cases involving the seizure of private land by the government, and one case involving the attempted seizure of a business by the government. There has also been an example of tax laws which could push a U.S. company from the market in favor of local ownership after courts have blocked an attempted expropriation. For these reasons, the U.S. Embassy in Bridgetown recommends caution when investing in real estate or conducting business in St. Kitts and Nevis.
St. Kitts and Nevis bases its legal system on the British common law system. The Attorney General, the Chief Justice, Puisne Judges, and Magistrates administer justice in St. Kitts and Nevis. An appeal may be taken to the organization of Eastern Caribbean States Court of Appeal and the final court of appeal for St. Kitts and Nevis is the Judicial Committee of the Privy Council in the United Kingdom.
The United States and St. Kitts and Nevis are both parties to the World Trade Organization (WTO). The WTO Dispute Settlement Panel and Appellate Body resolve disputes over WTO agreements, while courts of appropriate jurisdiction in both countries resolve private disputes.
St. Kitts and Nevis is also a member of the International Center for the Settlement of Investment Disputes (ICSID), also known as the Washington Convention.
Performance Requirements and Incentives
While there are no formal performance requirements, government officials will more likely approve investments they believe will create jobs and increase exports and foreign exchange earnings. There are no requirements for participation either by nationals or by the government in foreign investment projects.
There is no requirement that enterprises must purchase a fixed percentage of goods from local sources, but the government encourages local sourcing.
Fiscal Incentives Act
In an effort to increase investment, St. Kitts and Nevis has implemented a series of investment incentives. The Fiscal Incentives Acts provides a list of incentives including:
- Tax holiday of up to 15 years
- Additional tax rebates of up to five years
- Exemption from custom duties on material and equipment deemed necessary to establish or update an enterprise
- Repatriation of profits, dividends, royalties, and imported capital by arrangement with the Ministry of Finance
- Protection of investment through government agreement between St. Kitts and Nevis and the United States
- No personal income tax
These incentives are an added benefit to doing business in St. Kitts and Nevis.
Corporate Tax Incentives
Under the Fiscal Incentives Act, four types of enterprises qualify for tax holidays. The length of the tax holiday for the first three depends on the amount of value added in St. Kitts and Nevis. The fourth type, known as enclave industry, must produce goods exclusively for export outside the CARICOM region.
Maximum Tax Holiday
50% or more
25% to 50 %
10% to 25%
Companies which qualify for tax holidays are allowed to import into St. Kitts and Nevis duty-free all equipment, machinery, spare parts and raw materials used in production.
Hotels Aids Act and Taxes
The Hotel Aids Act provides relief from customs duties on items brought into the country for use in construction, extension and equipping of a hotel of not less than ten bedrooms. In addition, the Income Tax Act provides special tax relief benefits for hotels of more than 30 bedrooms. These hotels are exempt from income tax for ten years. If the hotel contains less than 30 bedrooms, gains or profits would be exempt from income tax for five years.
The hotel and restaurant tax is levied on the total accommodation charges of a hotel or guest house and on the cost of food and beverage sold by a restaurant. The total rate of tax is 9% (with 2% contributing to the Hotel and Accommodation Enhancement Levy). This tax is levied on the total accommodation.
Corporate Income Tax
Additionally, those who invest in St. Kitts and Nevis do not pay a capital gains tax, and have a corporate tax of 35% of net profits. Qualified companies enjoy full exemption from taxes on corporate profits for a period not exceeding 15 years. Corporate tax does not apply to exempt companies or to enterprises that have been granted tax concession.
Individuals and ordinary companies remitting payments to persons outside of St. Kitts and Nevis must deduct 10% withholding tax from the following:
- Administration, management or head office expenses
- Technical services fees
- Accounting and audit expenses
- Non-life insurance premiums
Withholding tax does not apply to profits of an approved enterprise, which is enjoying benefits under the Fiscal Incentives Act. This tax does not apply to exempt trusts, limited partnerships, companies or foundations.
Consumption tax is levied on the gross revenue of services provided by professionals such as Doctors, Lawyers, Dentists, and other specified persons listed in the Schedule to the Consumption Tax Act at a rate of 4%.
St. Kitts and Nevis provides companies with a further tax concession effective at the end of the tax holiday period. In effect, it is a rebate of a portion of the income tax paid based on export profits as a percentage of total profits.
Exemption from Import Duties
Full exemption from import duties on parts, raw materials, and production machinery is also available.
Citizenship through Investment
Under the Citizenship by Investment Program, foreign individuals can obtain citizenship in accordance with subsection (5) of Section 3 of the Citizenship Act of 1984, which grants the right of citizenship (without voting rights) by investment. Applicants through the program are required to go through a due diligence process before citizenship can be granted. The minimum that would entitle an investor to qualify is US$400,000 in real estate. Applicants must also provide a full medical certificate, and evidence of the source of funds.
Right to Private Ownership and Establishment
Foreign investors may hold up to 100% of an investment. With one exception, foreign investment in St. Kitts and Nevis is not subject to any restrictions, and foreign investors receive national treatment. The only restriction is the requirement to obtain an Alien Landholders License for foreign investors seeking to purchase property for residential or commercial purposes. The cost of these licenses is 10% of the value of the land or of the interest in the real estate to be purchased. Licenses are granted once properly submitted to Cabinet for consideration and payment of the license fees. Foreign investors do not require a landholding license for the purchase of land in certain parts of the island, such as Frigate Bay or the South East Peninsula.
Protection of Property Rights
Civil law protects physical property and mortgage claims. St. Kitts and Nevis signed the Paris Convention on Intellectual Property Rights (IPR), the Madrid accords, and is a member of the United Nations World Intellectual Property Organization (WIPO). Article 45 of the Protocol Amending the Treaty that established CARICOM commits all 15 members to implement stronger IP protection and enforcement.
The administration of intellectual property laws in St. Kitts and Nevis is under the responsibility of the Attorney General. The registration of patents, trademarks, and service marks is administered by the High Court Registry. The 2000 Act created an Intellectual Property Office responsible for the administration of all laws relating to intellectual property, which began functioning in 2004.
Transparency of Regulatory System
The regulatory system in St. Kitts and Nevis is transparent, and more information regarding the laws governing investment can be provided by contacting the St. Kitts Investment Promotion Agency.
St. Kitts and Nevis has a new draft investment code, which the EU assisted with drafting. Parliament is expected to pass and enact the code in 2013.
Additionally, the incorporation and registration of companies in the federation differs somewhat on its two constituent islands. In St. Kitts the process is regulated by the Companies Act No. 22 of 1996. The incorporation of companies in Nevis is regulated by the Nevis Island Business Corporation Ordinance No. 3 of 1984. Companies must register in the Companies Registry. There are no nationality restrictions for directors in a company, and in general, national treatment is applied. All registered companies must have a registered office in the Federation of St. Kitts.
In 2010, the St. Kitts, Nevis and Anguilla National Bank had almost US$ 1.1 billion (EC$3 billion) in assets.
Additionally, the Treaty of Chaguaramas provides the competition policy applicable to CARICOM States. Member States are required to establish and maintain a national competition authority for facilitating the implementation of the rules of competition. At the CARICOM level, a regional Competition Commission is established to apply the rules of competition in respect of anti-competitive cross-border business conduct. The CARICOM competition policy addresses anti-competitive business conduct, such as agreements between enterprises, decisions by associations of enterprises, and concerted practices by enterprises that have as their object or effect the prevention, restriction or distortion of competition within the Community; and actions by which an enterprise abuses its dominant position within the Community. No legislation is yet in operation to regulate competition generally. However, sectoral regulation of competition in the telecommunications field is provided for under the Telecommunications Act.
Efficient Capital Markets and Portfolio Investment
St. Kitts and Nevis is a member of the OECS, and as such, it is also a member of the Eastern Caribbean Securities Exchange (ECSE). The ECSE is a regional securities market established by the Eastern Caribbean Central Bank and licensed under the Securities Act of 2001, a uniform regional body of legislation governing securities market activities to facilitate the buying and selling of financial products for the eight member territories. St. Kitts and Nevis is a member of this stock exchange, and is open to portfolio investment.
Competition from State-Owned Enterprises
There are a very limited number of statutory corporations (state-owned enterprises) in St. Kitts and Nevis. Those that exist do not generally post a threat to investors, as they directly support the government in achieving its objectives. For example, the St. Kitts Investment Promotion Agency is a statutory corporation.
Corporate Social Responsibility
Investors in St. Kitts and Nevis are required to recognize the economic and social objects as well as the policies and priorities of the government. They are also equally responsible for maintaining workers’ rights and safeguarding the environment. While there are no specific health and safety regulations, the Factories Law provides general health and safety guidance to Labor Ministry inspectors. The Labor Commission settles disputes over safety conditions. Workers have the right to report unsafe work environments without jeopardy to continued employment; inspectors then investigate such claims, and workers may leave such locations without jeopardy to their continued employment.
St. Kitts and Nevis does not have a history of political violence.
St. Kitts and Nevis does not have a major problem with corruption, although, there have been some unconfirmed allegations against government officials. Several private businesses have alleged self-dealing by government officials in the negotiation of business deals. The country is also party to the Inter-American Convention Against Corruption, and recently signed the follow-up mechanism.
Bilateral Investment Agreements
St. Kitts and Nevis has no bilateral investment treaty with the United States. St. Kitts and Nevis has a bilateral investment treaty with Costa Rica (CARICOM), and partial preferential agreements with Columbia and Venezuela. It is a member of the Caribbean Community and Common Market (CARICOM), and also has free trade agreements with Costa Rica and the Dominican Republic. It has double taxation agreements with Denmark, Norway, Sweden, and the United Kingdom.
St. Kitts and Nevis is also party to the following:
Caribbean Community (CARICOM)
The Treaty of Chaguaramas established CARICOM in 1973. Its purpose is to promote economic integration among its fifteen (15) Member States. Investors operating in St. Kitts and Nevis are given preferential access to the entire CARICOM market. The Revised Treaty of Chaguaramas goes further to establish the CARICOM Single Market and Economy (CSME), by permitting the free movement of goods, capital and labor within CARICOM States.
Organisation of Eastern Caribbean States (OECS)
The Revised Treaty of Basseterre establishes the Organisation of Eastern Caribbean States (OECS). The OECS consists of nine Member States of Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts & Nevis, St. Lucia and St. Vincent & the Grenadines with associate members being Anguilla and the British Virgin Islands. The purpose of the Treaty is to promote harmonization among Member States in areas concerning foreign policy, defense and security, and economic affairs. The six independent countries of the OECS ratified the Revised Treaty of Basseterre establishing the OECS Economic Union on January 21, 2011. The Economic Union established a single financial and economic space within which all factors of production, including goods, services and people, move without hindrance.
Economic Partnership Agreement (EPA)
The Economic Partnership Agreement (EPA) was concluded between the CARIFORUM States and the European Community and its Member States. The EPA is designed to replace the now expired transitional trade regime of the Cotonou Agreement. The overarching objectives of the EPA are to alleviate poverty in CARIFORUM, to promote regional integration and economic cooperation and to foster the gradual integration of the CARIFORUM states into the world economy by improving their trade capacity and creating an investment-conducive environment. The Agreement promotes trade related developments in areas such as competition, intellectual property, and public procurement, the environment and protection of personal data.
Caribbean Basin Initiative (CBI)
The objective of the Caribbean Basin Initiative is to promote economic development through private sector initiative in Central America and the Caribbean islands by expanding foreign and domestic investment in non-traditional sectors, diversifying CBI country economies and expanding their exports. It permits duty free entry of products manufactured or assembled in St. Kitts and Nevis into markets of the USA.
Caribbean / Canada Trade Agreement (CARIBCAN)
CARIBCAN is an economic and trade development assistance program for Commonwealth Caribbean countries in which Canada provides duty free access to its national market for the majority of products which originate in Commonwealth Caribbean countries.
OPIC and Other Investment Insurance Programs
In 1999, the U.S. Government's Overseas Private Investment Corporation (OPIC) signed with Citibank to establish a US$200 million Investment Facility for the Caribbean and Central America, as one means of encouraging investment and stimulating economic development. The Caribbean Development Bank, which is based in Barbados, administers this program. OPIC provides financing and political risk insurance to viable private sector projects, helps U.S. businesses invest overseas, and fosters economic development in new and emerging markets.
Additionally, in 2004, OPIC approved an additional investment guaranty of up to US$100 million to Citibank to establish a lending facility that will enable Citibank to expand its activity in Central America and the Caribbean, including lending to small businesses. Under this facility, Citibank and OPIC share credit risk in loans, and OPIC provides clearances on workers’ rights and environmental issues for each downstream loan.
St. Kitts and Nevis has a labor force of about 25,000 persons, with a literacy rate of 98%. The country’s technical and training needs are met largely by local colleges, which offer courses in skilled labor, including, plumbing, electrical engineering, air conditioning and refrigeration, masonry, carpentry, mechanical engineering, motor mechanics, typing and basic hotel skills. There is also a large pool of professionals to draw from, in fields such as law, medicine, business information technology and accounting. Many of the professionals in St. Kitts and Nevis trained in the Caribbean, the United States, Canada and the United Kingdom, where many of them gained work experience before returning to St. Kitts and Nevis.
The main labor unions include the St. Kitts and Nevis Trades & Labor Union and the St. Kitts and Nevis Teachers Union. St. Kitts also has a number of associations including the St. Kitts and Nevis Chamber of Commerce and Industry, along with active hotel, and construction associations. In regards to labor negotiations, the average duration of wage contracts is two years. During contract negotiations, the union with 51% of the workers in that particular industry is recognized by the employer as the worker’s representative; however, some unions do not get involved in contract negotiations.
Labor unions are free to organize and to negotiate for better wages and benefits for union members. The law prohibits anti-union discrimination, but does not require employers found guilty of such action to rehire employees who were fired for union activities. However, the employer must pay lost wages and severance pay. There is no legislation governing the organization and representation of workers, and employers are not legally bound to recognize a union, but in practice employers do so if a majority of workers polled wish to organize.
Collective bargaining takes place on a workplace-by-workplace basis, not industry wide. The Labor Commissioner mediates all types of disputes between labor and management on an ad hoc basis. However, in practice few disputes actually go to the Commissioner for resolution. If neither the Commissioner nor the Ministry of Labor are able to resolve the dispute, the law allows for a case to be brought before a civil court.
The Constitution forbids slavery and forced labor, and they do not occur in practice. While neither the Constitution nor the law specifically address bonded labor, it has also not been a problem in practice. The 1966 Employment of Children Ordinance outlaws slavery, servitude, and forced labor, and prescribes the minimum legal working age of 16 years. The Labor Ministry relies heavily on school truant officers and the community affairs division to monitor compliance, which they do effectively. The law mandates compulsory education up to the age of 16.
The minimum wage is US$2.96 (EC$8) per hour. These provide a barely adequate living for a wage earner and family; many workers supplement wages by keeping small animals such as goats and chickens. The Labor Commission undertakes regular wage inspections and special investigations when it receives complaints; it requires employers found in violation to pay back wages. The Government provides unemployment benefits to workers who lose their jobs temporarily or permanently.
The law provides for a 40- to 44-hour workweek, but the common practice is 40 hours in five days. Although not required by law, workers receive at least one 24-hour rest period per week. The law provides that workers receive a minimum annual vacation of 14 working days.
Foreign Trade Zones/Free Trade Zones
There are no foreign trade zones or free ports in St. Kitts and Nevis.
Foreign Direct Investment Statistics
According to the Eastern Caribbean Central Bank’s Statistics Department, St. Kitts and Nevis had an estimated XCD $272.20 million or US $100.8 million in FDI inflows in 2012 compared to XCD $301.35 million/US $111.61million in 2011. Direct Investment includes equity, re-invested earnings, land sales and other investment.
Major U.S. Investors
American Airlines/American Eagle, Amerijet International Inc., Avis Car Rentals, Caribbean Cinemas, Caribbean Cable Communications, Crowley Maritime Corporation, DCK Worldwide, Dominos, Federal Express, Golden Rock Inn, Heritage Hotel, Kiawah Partners, Met Life, Pricewaterhouse Coopers, Productions Products Company, Ross University, Stewart Title, Tropical Shipping and Construction Company, UPS, Western Union. Major franchises of U.S. companies include: Ace Hardware, Kentucky Fried Chicken and Marriott Hotels.
An American Chamber of Commerce (AmCham) does not operate in St. Kitts and Nevis.
For further information, please contact the Economic/Commercial Section at the U.S. Embassy.
U.S. Embassy, Bridgetown, Barbados
Jonelle M. Watson
U.S. Embassy Bridgetown, Barbados
Contacts for Investment Related Inquires
The following are contacts for investment related inquiries:
St. Kitts Investment Promotion Agency (SKIPA)
CAP Southwell Industrial Park
Basseterre, St. Kitts
Ministry of Finance
P. O. Box 898, Rams Building, Liverpool Row
Basseterre, St. Kitts
St. Kitts and Nevis Chamber of Industry and Commerce
P.O. Box 332
Basseterre, St. Kitts