The SVG Islands are an excellent jurisdiction for the forming of offshore companies, and it possesses a very well-defined taxation regime. The island effectively has zero tax for IBC’s undertaking most of their management and business offshore. However, it should be noted that that tax applies to the domestic segment, so, let’s look at the various St Vincent and the Grenadines Tax Rates.
In short, individual income tax rates range from 10% up to 30% in three distinct marginal income brackets. The local currency is the XCD(East Caribbean Dollar) and any local income above XCD$10,000 is taxed at 30%. Additionally, there is VAT which is levied on goods and services at a standard rate of 16%.
Read on for a full briefing on the jurisdiction’s tax operations.
- St Vincent and the Grenadines Tax Rates – Individual Brackets
- St Vincent and the Grenadines – Worldwide Income
- Dividends and Withholding Tax
- Foreign Tax Relief
- St Vincent and the Grenadines Tax Rates – Corporate
- Tax Year and Consolidated Returns
- Tax Installments
- General Anti-Avoidance Rules
- Other Key Tax Points
- St Vincent and the Grenadines Tax Rates - Final Summation
St Vincent and the Grenadines Tax Rates – Individual Brackets
As mentioned, individual taxes are applied domestically and, given the relatively low level of income nationally, are levied on modest amounts. Subsequently, the tax brackets have not moved in years and are represented as below:
|St Vincent and Grenadines Tax Rates|
|Individual Income Tax Rate||Taxable Income||Rate %|
|Up to XCD $5,000||10%|
|XCD $5,001 to XCD $10,000||20%|
|Over XCD $10,000||30%|
|Capital Gains Tax Rate||0%|
Additionally, there is no capital gains tax regime in place for individuals living within the islands making this quite an attractive proposition for those with significant assets based offshore. Individual taxation residency is established by being present in the jurisdiction for 183 days in a calendar year.
St Vincent and the Grenadines – Worldwide Income
However, it should be noted that individual taxpayers are taxed on worldwide income but really only to the extent that the funds are actually received within St Vincent and the Grenadines. Subsequently, taxable income is only assessed on the basis of it being derived from inside the island or repatriated during the tax year.
Dividends and Withholding Tax
The SVGs do not impose any withholding tax on any dividends received or paid offshore. However, it should be noted that interest revenues are taxed at a rate of 15% across any CARICOM country.
|Fees for Services||0%||0%||15%/20%||15%/20%|
Foreign Tax Relief
Finally, foreign tax credits are also available to be applied up to your total, maximum, tax bill. This provides some relief if you, potentially, resident in two separate tax jurisdictions and facing a bill from both places.
St Vincent and the Grenadines Tax Rates – Corporate
Company taxes are relatively straightforward in the SVG’s with a flat rate of 30% as both the headline CIT and Branch tax rate. As mentioned, there is no capital gains tax regime in St Vincent and this may be quite a large benefit for companies holding significant assets.
Tax residency for companies is, primarily, based on where the management is located and occurs. In this way, the authorities take a similar view as to economic substance procedures. If the company is centrally managed and controlled from the St Vincent and Grenadines then it will be considered a tax resident. Branch companies are treated in much the same way as a subsidiary company is.
Tax Year and Consolidated Returns
The SVG tax year runs on the same basis as the company’s fiscal year. This means that the entity will need to elect a filing month when registering with the St Vincent tax authority.
It should also be noted that St Vincent and the Grenadines do not allow consolidated returns for group and subsidiary companies. Subsequently, each legal entity will need to lodge its own tax returns and provide financial statements on an individual basis. This can increase the general cost of tax compliance for resident companies located on the islands.
Similar to many countries, tax installment payments are normally due at the end of every quarter. The normal schedule of due dates is the 31-March, 30-June, 30-September, and 31-December. This splits your potential tax payments evenly across the 4-quarters with the final return being filed within 3 months of the end of the company’s financial year.
General Anti-Avoidance Rules
Thankfully, St Vincent and the Grenadines have no form of general anti-avoidance rules that can be applied to your affairs. They do not assess transfer payments, BEPS, controlled foreign company status, or any form of exit tax obligations.
The absence of any anti-avoidance rules means that you can rely upon a black-letter interpretation of the local tax laws. This provides significant certainty for entrepreneurs looking to base an offshore company on the islands.
Other Key Tax Points
It should be noted that there is a social security contribution tax assessed around employee earnings. Subsequently, if you have local employees you will need to contribute the following amounts as part of the social scheme:
Employer contribution of 5.5% of earnings
Employee contribution of 4.5% of earnings.
There is a ceiling for contributions of XCD$4,333 per month.
Finally, there is a special real estate tax of 5% per annum that is levied on companies owning real property within St Vincent and Grenadines. The reality is that a shortage of real estate exists, and this is a significant disincentive for offshore companies to participate in the local property market.
St Vincent and the Grenadines Tax Rates – Final Summation
St Vincent and the Grenadines is an excellent offshore jurisdiction and probably one of the more desirable tax havens across the Caribbean. It brings with it no withholding tax of any kind, foreign tax relief, and easily manageable tax residency rules.
For those based within the Americas, the SVG’s makes great sense from both a tax and individual residency perspective. The treatment of worldwide, non-repatriated income, means that you could potentially reside almost tax-free on the islands.
If you have any questions regarding relocation or tax, please send us an email as we have a trusted partner in the SVGs who will be able to assist you.