Understanding Taxation in St. Kitts And Nevis
Many websites and agencies offering citizenship by investment advertise Saint Kitts & Nevis as an absolute zero-tax country as if it had no taxes at all. This is not entirely correct.
While it is true that citizens and companies in Saint Kitts & Nevis can achieve zero taxation, there are certain things to be aware of. In fact, the country does have certain kinds of taxes which depend on the type of income.
In summary, investors participating in the citizenship by investment program will likely benefit from zero taxation in Saint Kitts & Nevis. However, we believe that it is important that the investor knows when he/she potentially is subject to taxation in the country. This is described in this article.
Businesses and individuals that are connected to St. Kitts and Nevis, whether it be because of business conducted on the islands or through obtaining a St. Kitts and Nevis passport can enjoy many taxation benefits. Before deciding to pursue residency on one of these Caribbean islands or operate your business there, understanding how taxes work is key. We’ll touch on individual taxation, business taxation, and property taxes.
Individual Taxation in St. Kitts and Nevis
When discussing personal taxation, keep in mind that there are two scenarios: tax residents and non-residents are treated differently. Tax residents are people who live on the islands for more than 50% of the year, while non-residents don’t reside in the country. You can be a non-resident even if you hold a Saint Kitts & Nevis citizenship and passport.
To start off, neither residents nor non-residents are required to pay income tax or tax on money that was inherited. However, tax residents are not required to pay taxes on dividends or royalties at all, while non-residents will have to pay taxes on dividends or royalties received from inside Nevis or St. Kitts at a rate of 15%. Anything coming from foreign countries will not be taxed.
Individuals that are employed in St. Kitts and Nevis are required to pay a 5% tax on their wages earned in the country. Please note that this tax is only applicable to local salary, and not to dividends, capital gains, and other types of income.
Taxation for Businesses
If your business is registered in St. Kitts and Nevis or managed from there, it is considered a resident organization and will be taxed as such. Resident companies have an official corporate tax rate of 33%, though there is the possibility to reduce the tax to 1% or pay a fixed annual license fee instead.
Non-resident companies are only required to pay taxes on profits received from inside the country. A withholding tax of 15% is applied if non-resident companies get dividends from inside St. Kitts and Nevis; nothing coming from outside the country will be taxed.
The Basics of Property Taxes
When buying and selling real estate, there are a couple of types of fees that both parties involved in the transaction should be aware of: stamp duty and a license to own land. Stamp duty is paid by the seller of a property, and it has a rate that falls somewhere between 6%-10% of the sale price, with the percentage being dependent on the location of the property. Buyers are required to buy a license to own land and will pay 10% of the value of the property. This rule is not applicable to buyers participating in the St. Kitts and Nevis citizenship program.
Property owners are required to pay land tax and building tax. The rate for both of these items is dependent upon the property itself. The only way to avoid paying property taxes is to be certified as an agricultural, educational, or institutional property.
Tax Haven Reality
It’s no secret that companies and individuals are in favor of many of the taxation policies in place in St. Kitts and Nevis. Usually, setting yourself or your business up to pay taxes in this country will save a significant amount when compared to paying taxes in your home country. In fact, you could easily pay zero income and corporate tax in Saint Kitts & Nevis. As long as you are aware of the rules stated above.
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