WORLD TRADE  
ORGANIZATION   
G/SCM/N/243/KNA 
1 August 2012 
 (12-4273) 
Committee on Subsidies and Countervailing Measures Original:   English 
  
 
 
SUBSIDIES 
 
Continuation of Extension under SCM Artic le 27.4 of the Transition Period for 
the Elimination of Export Subsidies Pursuant to the Procedures Contained 
in the General Council Decision in Document WT/L/691 
 
Updating notification 
 
SAINT KITTS AND NEVIS 
 
  The following communication, dated 30 July 2012, is being circulated at the request of the Delegation of Saint Kitts and Nevis.  
_______________ 
 
 1. Title of the programme for which extension is requested pursuant to procedures in G/SCM/39 
 
 The Fiscal Incentives Act No. 17 of 1974.  This is an Act to provide incentives to industry. 
 
2. Period covered by the notification 
  The programme description is as of 30 June  2012 and is identical to that as of 
1 September 2001.  
3. Policy Objective and/or purpose of the subsidy 
 
 The objective of this programme is to s timulate export performance, support investment, 
promote economic activity, and promote diversifica tion in traditional and non-traditional products. 
 
4. Background and authority for the subsidy 
 
Background 
 
 The Government of St. Kitts and Nevis consid ers that appropriate conditions for encouraging 
foreign direct investment are to be promoted in  order to ensure the economy remains in a viable 
position.  
Authority 
 
 Fiscal Incentives Act (St. Kitts-Nevis-Anguilla), No. 17 of 1974.   G/SCM/N/243/KNA 
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  5. Form of the Subsidy 
 
 The subsidy takes the form of a tax exemption.  6. To whom and how the subsidy is provided (w hether to producers, exporters or others), 
through what mechanisms, (whether it is a fixe d sum or fluctuating amount per unit), and if 
the latter, how is it determined? 
 
 The main beneficiaries of the fiscal incen tives scheme are manufacturing and agro-processing 
enterprises.  The incentive scheme is managed by th e Ministry of International Trade, Industry, 
Commerce and Consumer Affairs.  Applications  for incentive benefits are submitted to the 
aforementioned Ministry, which recommends to Cabi net the level and type of concessions to be 
granted.   The Fiscal Incentives Act allows for the gran ting of a corporate tax holiday of up to 
fifteen (15) years, for the manufacture of approved products by approved enterprises.  The duration of 
these concessions is in accordance w ith the local value added generate d.  In this respect, the Act 
classifies these approved enterprises as follows:  
i. Group I  enterprises, where the local value added is 50% or more of sales, may enjoy a tax 
holiday of up to 15 years; 
 
ii. Group II  enterprises, where the local value added is between 25% and 49% of sales, may 
enjoy a tax holiday of up to 12 years; 
 
iii. Group III enterprises, where the local value added is between 10% and 24% of sales, may 
enjoy a tax holiday of up to 10 years; 
 
iv. Enclave enterprises , where production is exclusively for export, may enjoy a tax holiday of 
up to 15 years. 
  Where an approved enterprise is engaged in a highly capital intensive industry it may receive 
some benefit for a period of up to 15 years. 
  The Act also grants import duty exemptions for machinery, equipment and spare parts, 
building materials, raw materials and others, as a ppropriate to be used in eligible enterprises. 
 
 The Fiscal Incentives Act No. 17 of 1974 fu rther provides for corporate tax relief under 
certain circumstances once the tax holiday period h as expired.  The relief is contingent on export 
performance.  It is granted on the export profits  of an enterprise accruing from the export of its 
approved product(s).  Relief is provided for non-trad itional exports to all countries;  however, in the 
case of exports to Guyana, Jamaica and Trinidad  and Tobago, the period of relief is of only 
five (5) years immediately following the expiration of the tax holiday period. 
 
(Schedule II part two of the Act attached explai ns the method of calculating export allowance)  G/SCM/N/243/KNA 
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  7. Subsidy per unit, or in cases where this is  not possible, the total amount or the annual 
budgeted amount for this subsidy (indicating, if possible, the average subsidy per unit in the 
previous year). Where provision per unit subsid y information (for the year covered by the 
notification, for the previous year or both) is not possible a full explanation should be 
provided  
 
 Given the nature and coverage of the programme there are no statistics available which reflect 
the amount of the subsidy per unit.  Further, ther e is no provision in our annual budget to determine 
the amount of funds allocated to this form of benefit provided for approved enterprises because of 
approved assistance is revenue foregone. 
 
8. Duration of the subsidy  
 
 The duration of the subsidy as currently applied is subject to St. Kitts and Nevis' rights and 
obligations under the WTO Agreements a nd in particular, the SCM Agreement. 
 
9. Statistics on the impact of the programme 
  The following table illustrates the total value of  St. Kitts and Nevis' foreign trade with world 
partners on all commodities during the period 2000-2011.   
Value (EC$ millions) of St. Kitts-Nevis' Foreign Tr ade with World Partners for the period 2000-2011 
 
Year Imports Exports Re-Exports 
    
2000 529.1 78.8 9.7 
2001 510.5 77.5 6.3 
2002 544.6 94.8 10.6 
2003 538.9 101.8 9.5 
2004 493.4 101.1 8.2 
2005 568.3 81.0 12.5 
2006 673.7 95.7 11.7 
2007 737.3 85.5 7.3 
2008 877.0 116.1 23.6 
2009 739.7 83.2 31.3 
2010 731.7 71.9 16.6 
2011 669.7 91.8 31.8 
 
10. Transparency Provisions 
 
 As in previous years, St. Kitts and Nevis continued its policy of adopting a sub-regional 
approach to amending the legislation to make it compatible with the Agreement on Subsidies and 
Countervailing Measures.  This will be instrument al for the continued development of harmonized 
policies under the recently established Economic Union among the members of the Organisation of Eastern Caribbean States (OECS). 
 
 The objective of the work being undertaken in this regard is to reform the areas of the 
legislation that are incompatible with the SCM Agreement.  G/SCM/N/243/KNA 
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   Beneficiaries of the subsidy are currently work ing with the Ministry of International Trade, 
Industry, Commerce & Consumer Affairs and the Ministry of Legal Affairs to reform the Fiscal Incentives Act.  Assistance is also being provided by a regional legal consultant to amend the 
legislation to be compliant with the provisions of Article 27.4 of the Agreement on Subsidies and 
Countervailing Measures. 
  G/SCM/N/243/KNA 
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  ATTACHMENT I 
 
 
SCHEDULE 1 
 
MEMBER STATES 
 
 
(a) Antigua     Jamaica  Barbados    Montserrat 
 Belize     St. Kitts/Nevis/Anguilla 
 Dominica    St. Lucia 
Grenada    St. Vincent  Guyana     Trinidad & Tobago 
 
(b) any other State of the Caribbean region that  becomes a member of the Common Market. 
  
SCHEDULE II 
 
PART I 
  
EXPORTS TO THE FOLLOWING TERRITORIES ARE  
NOT ELIGIBLE FOR EXPORT ALLOWANCE 
 
(c) Antigua     Jamaica 
Barbados     Montserrat B e l i z e       S t .  L u c i a  Dominica     St. Vincent  G/SCM/N/243/KNA 
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  PART 2 
 
 
METHOD OF CALCULATING EXPORT ALLOWANCE 
 
1. An export allowance set off for the purposes of section 16 shall be calculated as follows: 
  Export profits as a percentage     Rebate of income tax as a 
 of total profits                                                            percentage of income tax on export profits 
 
 10 but under 21  25% 
 21 but under 41  35%  41 but under 61  45% 
 61 and over  50% 
 
 
2. for the purposes of calculation – 
 
(a) export profits as a percentage of total profits " shall be deemed to be export sales as a 
percentage of total sales". 
 
(b) profits attributable to exports shall be taken to be the amount resulting from the 
formula p x e   where – 
                                          s 
 
(i) "p" represents the chargeable profit of a company for its year of income 
 
(ii) "e" represents the proceeds of sales (ex-f actory) of the output of a company 
exported during its year of income; 
 
(iii) "s" represents the proceeds of sales (ex -factory) of the total output of the 
company during its year of income. 
 
3. In computing the proceeds of all sales for the year of income there shall be deducted any 
excise duty paid on the goods sold during that year. 
   
 
  G/SCM/N/243/KNA 
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  SCHEDULE III 
 
TAX HOLIDAY PERIODS 
  
Classification of 
Approved Enterprise   Tax Holiday Period 
         Group             Years 
 
 
Group I Enterprise   15 
Group II Enterprise   12 Group I Enterprise   10 Enclave Enterprise                       15  
 
    W.F. Glasford 
   Speaker 
 
Passed in the House of Assembly this 17
th day of April, 1974. 
  
E. JAMES FLEMING 
Ag. Clerk of the House of Assembly. 
 
  
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