Saint Vincent and the Grenadines Changes in Offshore Tax Regimes and Economic Substance Requirements

Saint Vincent and the Grenadines has amended its International Business Company Act and the International Trust Act to comply with the requests of the EU and the OECD.

International Business Companies have changed their name to Business Companies (BCs) and are no longer ring-fenced, meaning both residents and non-residents will be able to operate with BCs. These BCs will be able to do business within Saint Vincent or with Saint Vincent residents too.

BCs are now obliged to file Directors and Shareholders details to the Companies Registry, and companies with over USD 4 Million revenue or USD 2 million of assets will be required to file an annual return.

Corporations set up in Saint Vincent will no longer be able to issue bearer shares.
The full tax exemption has been removed and companies are now also subject to customs duties.

Existing companies incorporated before December 31, 2018, are grandfathered and will keep enjoying corporate tax exemptions until June 2021. Note that the grandfathering provision does not apply for income derived from intellectual property assets acquired on or after 1 January 2019.

Companies incorporated in 2019 are currently subject to the local tax regime (30% tax on worldwide income) and will require to file tax returns.

However, the Financial Services Authority (FSA) has already announced plans to amend the Income Tax Act to implement a territorial tax regime, during the first quarter (Q1 2019), where only local-sourced income will be subject to taxation. This territorial tax regime would be applied retrospectively for all companies incorporated in 2019.

Once the territorial tax regime is in place, even if a given Saint Vincent company doing business abroad does not owe taxes it might need to file tax returns.

Together with the territorial tax regime, Saint Vincent is also planning to enact legislation to enforce economic substance requirements for certain businesses, such as regulated companies, pure equity holdings or companies providing services to or purchasing goods from other affiliated companies.

For more information please visit our Valsen Fiduciaries’ Saint Vincent offerings, or contact us.

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