WORLD TRADE
ORGANIZATIONG/SCM/N/74/VCT
4 January 2002
(02-0039)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement
on Subsidies and Countervailing Measures
Requests Pursuant to the Procedure in Document G/SCM/39
ST. VINCENT AND THE GRENADINES
The following communication, dated 31 December 2001, has been received from the Ministry
of Foreign Affairs, Commerce and Trade of St. Vincent and the Grenadines.
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The Ministry of Foreign Affairs, Commerce and Trade of St. Vincent and the Grenadines
presents its compliments to the Central Registry of Notifications of the Secretariat of the World Trade
Organisation (WTO).  We hereby notify the follow ing statement requesting an extension under SCM
Article 27.4 pursuant to the procedures set forth in the document G/SCM/39 adopted by the Ministers
in Doha.
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Fiscal Incentives
As outlined in the recent Trade Policy Review of St. Vincent and Grenadines
(WT/TPR/S85/VCT).
Incentives exist in the form of tax holidays, import duty exemptions, repatriation of profits,
and withholding tax exemptions.  The incentives scheme is managed by the Ministry of Trade,Industry, and Consumer Affairs, while the St. Vi ncent and the Grenadines Development Corporation
provides investment promotion services.  Applications for incentive benefits are submitted to the
Ministry, which decides on the level and type of concessions to be granted.  The main beneficiaries of
the incentives scheme are manufacturing enterprises and hotels.
The Fiscal Incentives Act No. 5 of 1982, as amended by Act No. 20 of 1987 and Act No. 16 of
1991, allows for the granting of a tax holiday for the manufacture of approved products by approved
enterprises, as follows:  (i) up to 15 years for Group 1 enterprises, in which local value is 50% or
more of sales;  (ii) up to 12 years for Group 2 enterprises, in which local value is between 25% and
50% of sales:  (iii) up to 10 years for Group 3 enterprises, in which local value is between 10% and
25% of sales;  (iv) up to 15 years for enclave enterprises, in which production is exclusively for
export;  and (v) up  to 15 years for capital intensive enterprise, in which there is investment of not lessG/SCM/N/74/VCT
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than US$25 million.  The Act also grants import duty exemptions for the importation of machinery,
equipment, spare parts, building materials, raw and packaging materials, and others, as appropriate,
to be used in eligible enterprises.  The length of the tax holiday depends on the amount of value added
generated in St. Vincent and the Grenadines.  Local value added is defined as the amount realized
from the sales of the product over a continuous pe riod of 12 months, minus the cost of imported raw
materials, components, parts of components, fuels and services, and the wages and salaries paid to
foreign nationals.  Approved enterprises are those which had been producing an approved product by
13 August 1982;  applications for approved enterprise status may be made when new manufacturing
enterprises are established.  Approved products must satisfy CARICOM rules of origin.
Benefits under the Act also include import du ty and GCT exemptions for the importation of
machinery, equipment, spare parts, building materials, raw and packaging materials to be used ineligible enterprises.
The Act provides for income tax relief under certain circumstances once the tax holiday
period has expired.  This relief is contingent on exportation;  it is granted on the export profits of an
enterprise accruing from its exports of the approved product.  Relief is provided for non-traditionalexports to all countries;  however, in the case of exports to Guyana, Jamaica, and Trinidad and
Tobago, the period of relief is of only five yea rs immediately following th e expiration of the tax
holiday period.  The percentage of relief depends on the share of export profits in total profits.  For a
share of between 10% and less than 21%, the maximum tax relief is 25%;  for a share of export
profits of between 21% and less than 41%, the maximum tax relief is 35%;  for a share of between41% and less than 61%, the maximum relief is 45%;  and for a share of more than 61%, the maximum
percentage of tax relief is 50%.  Allowances may  only be made once for any specific approved
product.
As mentioned in the section on exports, enterprises not benefiting from fiscal concessions
under the Fiscal Incentives Act are taxed at special corporate rates.  Particular emphasis is placed on
incentives for export production:  income from m anufacturing for extra-CARICOM markets is taxed
at 25%;  income from manufactured exports to Barbados, Guyana, Jamaica, and Trinidad and
Tobago is taxed at 30%;  and income from manufactu ring exported to other OECS countries or sold
domestically at 35%.  The regular rate is 40%.
The Hotels Aid Act No. 16 of 1988 allows for fu ll exemption from taxes on profits for hotels,
apartments, and guest houses, as well as exempt ion from customs duties and consumption tax on
articles of hotel equipment to equip and upgrade hotel property, service vehicles, material for the
refurbishment, renovation or expansion of existing hotels, or for the construction of new hotels.  The
benefits are applicable if the hotel has at least five rooms, or if the expansion is of no less than five
rooms.  For the construction of new hotels, the peri od of income tax exemption is ten years for hotels
of between five and 20 rooms;  12 years for hotels of between 21 and 34 rooms;  and 15 years for
hotels of 35 rooms or more.  The period of income tax exemption for repairs and expansion is:  nine
years for hotels creating an addition of between five and nine rooms;  ten years for hotels adding
between ten and 35 rooms;  and 15 years for expansions of more than 35 rooms.  The length of the
customs duty benefits is determined by Regulation.
Under the Industrial Incentive Credit Scheme, small and medium-sized enterprises producing
manufactured goods may be granted exemption from th e consumption tax.  Enterprises of St. Vincent
and the Grenadines may also receive concessionary credits funded or guaranteed by the Caribbean
Development Bank (CDB) for between US$750,000 and US$5 million at the current (2000)preferential rate of interest of 8.75%, with a repayment period of up to 14 years with three years
grace.G/SCM/N/74/VCT
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In agriculture, the St. Vincent Marketing Corporation provides marketing support to farmers.
Farmers also receive support services from the Ministry of Agriculture.  They have traditionally been
exempt from income tax, and are also granted a 75% import duty relief on pick-up trucks.
St. Vincent and the Grenadines wishes to indicate its intention to seek extension of all of the
above incentive programmes.  This extension is necessary in light of the current economic downturn
and the critical need to attract financing for In vestment Trade and Development in poor vulnerable
small economies like ours.
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