St. Kitts-Nevis Takes Steps to Safeguard Financial Services Sector and To Comply With International Best Practices and Standards

Basseterre, St. Kitts, December 21, 2018 (SKNIS): The Federation of St. Kitts and Nevis is taking decisive steps to safeguard its financial services sector and to make sure that it is complying with international best practices and standards with the passing into law of several bills designed to achieve this.

On December 19, 2018, several amendments to bills were introduced in the National Assembly including Companies (Amendment) Bill, 2018; Financial Services Regulatory Commission (Amendment) Bill, 2018; Captive Insurance Companies (Amendments) Bill, 2018; Trusts (Amendment) Bill, 2018; and Limited Partnerships (Amendment) Bill, 2018.

In lending support to the amendments, Minister of International Trade, Industry and Commerce, the Honourable Lindsay Grant, said “there is need to continue to strengthen the regulatory process and systems by identifying the legislation and regulatory gaps and taking the necessary action to address them.”

Minister Grant said that the listing of countries as Non-cooperative Jurisdictions for Tax Purposes by the European Union (EU) has many detrimental consequences for small island developing states (SIDS).

“It is a well-known fact that the international tax standards designed by developed countries, primarily those countries that form part of the European Union and the Organization for Economic Cooperation and Development (OECD), continue to change rapidly with potentially deleterious effects for small countries like St. Kitts and Nevis,” he said. “As the international standards evolve, we (St. Kitts and Nevis) are forced to respond not only quickly, but we are forced to respond appropriately in the interests of maintaining the image of St. Kitts and Nevis as a responsible and respected partner in the global financial ecosystem.”

“Notwithstanding our past successful efforts, we continue to be challenged to do more to remain compliant with the international standards that seek to strengthen global tax governance by reducing tax fraud, tax evasion, tax avoidance, money laundering, and terrorist financing,” Minister Grant added.

He said that since 2017, St. Kitts and Nevis has been working assiduously “to understand the new requirements of these standards and ready to implement a series of administrative reforms in response to the EU Code of Conduct group’s publication of a list of non-cooperative jurisdictions for tax purposes.”

According to Minister Grant, the EU Code of Conduct group assesses jurisdictions based on three general criteria: the first, being tax transparency; the second, being fair taxation; and the third, being the implementation of the Anti-Beps (Base Erosion and Profit Shifting) measures.

He said that St. Kitts and Nevis was deemed compliant with two of the three criteria, which were tax transparency and the implementation of the Anti-Beps measures.

However, the Code of Conduct group and the OECD FHTP (Forum on Harmful Tax Practices), identified the Exempt Companies Regime in St. Kitts as being harmful and being non-compliant with the guidelines they set forth and so St. Kitts and Nevis was requested to amend or to abolish this regime by December 31, 2018, to be compliant with the EU criteria, said Minister Grant.

He said that St. Kitts and Nevis made a commitment to address the issues raised by the EU Code of Conduct group on March 9, 2018. The commitment read in part: “Amend or abolish the provisions in its legislative framework for international financial services and in particular the offshore companies which may be considered to be harmful taxation practice by the deadline of 31st December, 2018.”

Minister Grant highlighted that the several (amendment) bills introduced in the National Assembly on December 19, 2018, have two objectives: one, to provide that finance business would only be applicable to licensed trust and corporate providers, and two, to expressly include individuals as corporate service providers of finance business.

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