G/SCM/N/275/KNA  
 
21 August 2014  
(14-4810)  Page: 1/5  
Committee on Subsidies and Countervailing Measures  Original: English  
 
 SUBSIDIES 
TRANSPARENCY NOTIFICATION CONCERNING THE EXTENSIONS PROVIDED FOR IN ARTICLE 27.4 
OF THE AGREEMENT ON SUBSIDIES AND COUN TERVAILING MEASURES OF THE TRANSITION 
PERIOD FOR THE ELIMINATION OF EXPORT  SUBSIDIES, GRANTED PURSUANT TO 
THE PROCEDURES IN THE GENERA L COUNCIL DECISION WT/L/691 
SAINT KITTS AND NEVIS 
The following communication, dated 23 July 2014 is being circulated at the request of the 
Delegation of St. Kitts and Nevis.  
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 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 2014 an d 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 stimulate export performance, support investment, promote 
economic activity, and promote diversification in traditional and non-traditional products.  
4. Background and authority for the subsidy 
 
Background  
The Government of St. Kitts and Nevis considers 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. 
 5. Form of the Subsidy 
 
The subsidy takes the form of a tax exemption. 
 6. To whom and how the subsidy is provided (whether to producers, exporters or others), 
through what mechanisms, (whether it is a fixed sum or fluctuating amount per unit), and if 
the latter, how is it determined 
 
The main beneficiaries of the fiscal incentives scheme are manufacturing and agro-processing 
enterprises. The incentive scheme is managed by the Ministry of International Trade, Industry, G/SCM/N/275/KNA 
 
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  Commerce and Consumer Affairs. Applications for incentive benefits are submitted to the 
aforementioned Ministry, which recommends to Ca binet the level and type of concessions to be 
granted.  
The Fiscal Incentives Act allows for the granting 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 with the local value added generated. 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 hi ghly 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 approp riate to be used in eligible enterprises. 
 
The Fiscal Incentives Act No. 17 of 1974 further provides for corporate tax relief under certain 
circumstances once the tax holiday period has 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-traditional 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 explains  the method of calculating export allowance) 
 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 subsidy 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, there is  no provision in our annual budget to determine 
the amount of funds allocated to this form of be nefit 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 and 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 2000-2013. G/SCM/N/275/KNA 
 
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  Value (EC$ millions) of St. Kitts-Nevis' Foreig n Trade with World Partners for the period 
2000-2013 
 
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 
2012 754.2 109.0 28.6 
2013 814.9 94.1 28.1 
 
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 is will be instrumental for the continued development of harmonized policies under the 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.  
 Beneficiaries of the subsidy are currently working with the Ministry of International Trade, Industry, Commerce & Consumer Affairs and the Mi nistry 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/275/KNA 
 
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  ATTACHMENT 1 
SCHEDULE I 
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 th at 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 
  
PART II 
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 of total profits 
Rebate of income tax as a 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 prof its "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 
 G/SCM/N/275/KNA 
 
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  (ii) "e" represents the proceeds of sales (ex-fact ory) 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. 
 
SCHEDULE III 
TAX HOLIDAY PERIODS 
Classification of Approved Enterprise Group Tax Holiday Period 
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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