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Attention Investors - St Lucia Needs You!

Expat Briefing Editorial Team
09 June, 2014


Economic citizenship programmes are largely a thing of the past, and currently only two countries in the Caribbean use them in an attempt to lure investment from wealthy foreigners. However, they might soon be joined by a third in the shape of St. Lucia, and in this week’s Expat Briefing feature, we run the rule over this Eastern Caribbean island-nation.


Introduction

In April, St. Lucia’s Prime Minister Kenny Anthony said his Government was giving serious consideration to the introduction of the economic citizenship programme in an effort to boost foreign investment in the light of an alarming slide in the island’s economy.

With tourist arrivals having fallen in recent years, and with the island still reeling from the impact of the global financial crisis, Anthony described the current economic climate as “severe, debilitating and oppressive” and said that St Lucia may well have to look at initiatives that it once “frowned upon.”

“This is a difficult environment perhaps calling for different responses,” he said. “I think we cannot close our eyes because it’s an option we may have to consider and in so doing we may have to look at the experiences of other countries,” the PM told reporters.

Anthony said St. Lucia as a county has “huge problems on our hands,” adding that what was rejected previously will now have to be re-examined.


About St Lucia

A byword for tropical beauty, St Lucia is a scenic and atmospheric Caribbean island located between the Caribbean Sea and the North Atlantic Ocean, to the north of Trinidad and Tobago. The terrain of the 600 sq km island is volcanic and mountainous with some broad, fertile valleys. The highest point is Mount Gimie at 950m, in the western part of the island, although the two striking cone-shaped peaks south of the western coastal town of Soufriere, known as the twin Pitons, are one of the scenic natural highlights of the Caribbean. Sandy beaches abound, which has helped the island become a popular upmarket tourist destination. As one would expect, St. Lucia’s climate is tropical, but temperatures, which range between 23 and 29 Celsius, are moderated by northeast trade winds. There is a dry season from January to April, and a rainy season from May to August.

The island, with its fine natural harbour at Castries, the capital city, was contested between England and France throughout the 17th and early 18th centuries (changing possession 14 times); it was finally ceded to the UK in 1814. Even after the abolition of slavery on its plantations in 1834, Saint Lucia remained an agricultural island, dedicated to producing tropical commodity crops. Self-government was granted in 1967 and independence in 1979. The majority of the island’s population of approximately 163,000 are of black African descent. The official language is English, but a French patois is also spoken.


The Economy

St Lucia has been able to attract foreign business and investment, especially in its offshore banking and tourism industries. Tourism is the main source of jobs and income – accounting for 65% of GDP – and the main source of foreign exchange earnings. However, the manufacturing sector is the most diverse in the Eastern Caribbean area. Crops such as bananas, mangos, and avocados continue to be grown for export, but St. Lucia's once solid banana industry has been devastated by strong competition. St Lucia is also vulnerable to a variety of external shocks, including volatile tourism receipts, natural disasters, and dependence on foreign oil. Furthermore, high public debt – 77% of GDP in 2012 – and high debt servicing obligations constrain the Government’s ability to respond to adverse external shocks. St. Lucia has experienced anaemic growth since the onset of the global financial crisis in 2008, largely because of a slowdown in tourism; airlines cut back on their routes to St. Lucia in 2012.

Nevertheless, St Lucia benefits from the monetary stability provided by its membership of the Organisation of Eastern Caribbean States, which uses a single currency, the Eastern Caribbean Dollar (ECD). The ECD is pegged to the US dollar at a rate of USD1 = 2.70.


Communications

Despite St Lucia’s relative remoteness, communications with the rest of the world are fairly good. Hewanorra International Airport near Vieux Fort Quarter on the southern tip of the island has the capability to handle the Boeing 747 and other similar long-range aircraft, and serves destinations in North America and Europe; the smaller George F. L. Charles Airport, located near Castries, handles mainly regional air traffic. There are three major seaports in St Lucia, at Castries, Cul-de-Sac and Vieux-Fort. Telecommunications infrastructure is sound, with the East Caribbean Fibre Optic System and Southern Caribbean fibre optic system submarine cables, along with Intelsat from Martinique, carrying international calls. Fixed-line density is around 25 per 100 persons, and mobile-cellular density is 130 per 100 persons.


Investment Incentives

Like many other small island-nations in the Caribbean, St Lucia is keen to encourage foreign investment and provides a range of tax and other incentives. As regards manufacturing, opportunities for investors exist in the following areas: processed foods; pharmaceutical products; processing of household and industrial waste; manufacture of light industrial tools and household products; manufacture of packaging materials; assembly of electronic components; fish processing; and processing of fruits, vegetables and animal feed. Tax holidays are available for periods of up to 15 years and import duties are waived on the import of plant, machinery, and raw and packaging material. The repatriation of profits and capital is also unrestricted.

Similar incentives are available to investors in tourism projects, such as hotel construction, conference venues; eco-tourism facilities, entertainment venues and water sports and yachting.

With the telecommunications sector now liberalised, the Government is also keen to increase investment in the ICT sector, particularly in the areas of computer-aided design, data entry and transfer, electronic publishing services, image processing, software development and call centre operations. Incentives include duty free import of equipment, but the Government also grants other tax incentives on an ad-hoc basis.


Trade Agreements

St Lucia is a member of the CARICOM free trade area and the World Trade Organisation. Through CARICOM, St Lucia also participates in other free trade agreements, including with the European Union and certain South American countries.


Tax

Ordinarily, companies resident in St Lucia are liable for corporate income tax on profits at a rate of 33%. This includes profits accruing directly or indirectly to a non-resident carrying on a business through a permanent establishment. Payments made to a non-resident are subject to a 25% withholding tax.

Personal income tax is progressive with a top rate of 30%. There are also property taxes, and a value-added tax (VAT) was introduced in 2012 at a standard rate of 15%.


Registering a Company

The incorporation and registration of a company must be done through an attorney registered and operating in St. Lucia. Companies must also register with the Inland Revenue Department and Social Security Institute before they begin trading. Registration fees are ECD850 for a for-profit company and ECD3,125 for a foreign company. There is also an ECD125 fee for registering a business name.

Additionally, all foreign individuals and companies intending to conduct business in St Lucia, and who own more than 49% of the company’s shares, are required to have a Trade License, for which there is a fee of ECD1,000. However, where the license is to be held by a person or company involved in selling goods where average stock does not exceed ECD10,000, the fee is ECD500. Only when a trade licence has been granted can an investor apply for fiscal incentives.

Companies whose taxable supplies have exceeded, or are expected to exceed, ECD180,000 a year must also register for VAT.


Work Permits and Residence

Under the existing Foreign National and Commonwealth Citizens (Employment) Regulation, all non-nationals wanting to conduct a business or be gainfully employed in St. Lucia must apply for a work permit. Applications can be obtained from the Labour Department of the Ministry of Education, Human Resource Development and Labour. There is a work permit fee of ECD2,000 per year for Commonwealth Caribbean nationals, and ECD7,500 per year for other Commonwealth and foreign nationals.

Non-nationals may apply for permanent residence after living in St Lucia permanently for two years. Citizenship may be applied for after seven years of permanent residence (five years if the applicant is from the Commonwealth Caribbean.


Other Second Citizenship Programmes

St Kitts

St Kitts and Nevis are islands in the Caribbean Sea, about one-third of the way from Puerto Rico to Trinidad and Tobago. The two volcanic islands are renowned for their beautiful mountain scenery

There is no personal income tax, net worth tax, gift tax, turnover tax, or estate duty on St Kitts and Nevis. Corporate Income Tax and Withholding Tax apply to domestic companies, but not to entities carrying on business solely with non-residents.

There are currently two options available to qualify for the Citizenship by Investment Program: the Sugar Industry Diversification Programme (SIDF) and citizenship by acquisition of real estate.

The SIDF was established on September 16, 2006 with National Bank Trust Company as Founder.  Its primary purpose was to assist the government to transition from sugar as the main industry to a more diversified economy by researching and funding the development of alternative industries.  The Foundation has been designated a specially approved project for the purpose of Citizenship-by-Investment.  Therefore, contributions to the Foundation of at least USD250,000 qualify foreign nationals, subject to stringent due diligence checks, to apply for Citizenship-by-Investment in St. Kitts & Nevis. 

This real estate programme is designed to channel investment into the country’s tourism industry, a major pillar of its economy. To qualify for the programme, the investor therefore must enter into a contract to purchase real estate in a tourist development with a minimum value of USD400,000 on either St. Kitts or Nevis. Qualifying real estate investments must be in completed, or under construction, houses, condos etc. Land only purchases do not qualify. 


Dominica

Dominica forms one of the Lesser Antilles islands in the Caribbean Sea between Guadeloupe to the north and Martinique to the south. The volcanic island is approximately 750 sq km and is largely covered in dense rain forest and is one of the poorest islands in the Caribbean.

Dominica’s tourism sector is less well-developed than in other Caribbean islands, and the island receives around 50,000 visitors per year; without an offshore business sector, the island’s economy is still largely dependent on agriculture. However, the tourism industry is growing and the Government has been keen to sell the island as an eco-tourist destination which may appeal to the more adventurous holidaymaker.

There are no taxes on non-residents in Dominica; however residents are subject to substantial taxes on income produced on the island.

A Dominica passport allows visa-free travel to more than 50 countries, including most of the Caribbean and the UK. Visitors to the rest of Europe and the US will require a visa.

Before being granted a Dominican passport, applicants have to undergo an extensive due diligence check by the government. This is normally carried out by a third party agency and costs between USD7,000 and USD15,000. After an initial review the agency will define the fee to be charged based on the citizenship, age and number of countries in which the applicants have lived. After the fee is paid directly to the investigation agency, due diligence can take from four to eight weeks.

For a more detailed description of second citizenship and second passport programmes, see our Expat Briefing special feature published on October 10, 2013.




 

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A rather uninformed opening statement. Evidently you are not up on Economic Citizenship activity. Ever hear of Grenada or Antigua and Barbuda? They just recently passed legislation for their programs. I also know of at least two other countries where this is under serious consideration.

John Edwards, 3 years ago.
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