Prime Minister of St. Kitts/Nevis, Dr. Timothy Harris has denied that his administration is moving towards introducing legislation allowing for personal income tax as well as increasing Corporate taxes in the twin-island Federation.
Piloting the Income Tax (Amendment) Bill, 2020 in the National Assembly, Harris, who is also Finance Minister, said he wanted to debunk misinformation in the public domain regarding the introduction of the legislation.
Harris said the amendments to the Bill seek to clarify the application of taxation to ensure full compliance with international good governance standards.
“Specifically, Mr. Speaker, the amendments will ensure that we meet our commitments to the Europe Union and the Organisation for Economic Co-operation and Development (OECD) and avoid the reputational damage and consequential financing costs which come with blacklisting.
“As a responsible government and highly respected member of the international community my government cannot shirk from our obligations even when they are inconvenient,” Prime Minister Harris said.
According to the amendment to the legislation, the assessable income of a resident company in St. Kitts-Nevis shall be all of its assessable income wherever arising. In addition, a company that is not resident within the twin-island Federation is within the charge to income tax if it carries on a trade or business here through a permanent establishment in the country.
The amendment legislation also allows for the assessable income of a company that is not resident here not to be assessable income attributable to the permanent establishment in the country.
Harris told legislators that this is not the first time legislative amendments are being made in the country in response to changing international regulations and practices.
“Over the last 20 plus years, the country’s National Assembly has had to make amendments to a range of tax regimes that was deemed inconsistent by the EU or OECD.
“At the level of the Nevis Island Assembly, it too has had to respond with amendments to the Nevis Business Corporation Ordinance and the Nevis Limited Liability Company Ordinance in order to ensure compliance with international tax good governance principles.
“Our efforts over the last four years to act in a timely manner led to St. Kitts and Nevis in February 2020 being removed from the EU’s list of non-cooperative jurisdictions,” Prime Minister Harris told the National Assembly.
He said the records will show that his coalition Team Unity administration over the last five years has managed the country well, achieving unprecedented surpluses year after year, without introducing one single new tax measure.
“We are a government disposed to keeping taxes low. The record is also pellucidly clear that for the last five years my Team Unity government has not introduced any new taxes. Instead, we have reduced the tax burden of our people by removing VAT from all food items, educational supplies and funeral expenses.
“Mr. Speaker, we went even further and more recently, as part of our stimulus package in response to the negative impact of COVID-19, we have instituted a series of tax breaks for the benefit of taxpayers large and small,” Prime Minister Harris said.
The government’s stimulus package provided for the removal of valued added tax (VAT) and import duty on additional hygiene items and the removal of import duty and customs service charge on selected food items for a period of six months; reducing the corporate tax from 33 to 25 per cent, and reducing the unincorporated business tax rate to two per cent from the original four per cent for a six month period.