WORLD TRADE  
ORGANIZATION   
G/SCM/N/226/KNA 
19 September 2011 
 (11-4519) 
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 
 
SAINT KITTS AND NEVIS 
 
 
 The following notification, dated 15 September 2011 , 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  2011 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. 
 5.  Form of the Subsidy 
  The subsidy takes the form of a tax exemption. G/SCM/N/226/KNA 
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  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 the 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 granting of  a tax holiday of up to fifteen (15) years, 
for the manufacture of approved products by approve d enterprises. The duration of these concessions 
is in accordance with the local value added gene rated. 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 a dded 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 further provides for income tax relief under certain circumstances once the tax holid ay 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 provi ded 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 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.  G/SCM/N/226/KNA 
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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 2000-2010. 
  
Value (EC$ millions) of St. Kitts-Nevis' Foreign Tr ade with World Partners for the period 2000-2010 
 
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 
 
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 even more critical  as we embark on the creation of an 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 were once again no tified formally of the time line for phasing out 
and eventual elimination of the subsidy as it is  currently applied. The most recent work was 
undertaken during a consultation attended by beneficiary stake holders from the Manufacturer's 
Division of the Chamber of Industry and Commerce,  which was held on 18 May 2011. The work of 
the committee established to reform the legisla tion will continue until an accepted outcome is 
achieved.   It is anticipated that the Fiscal Incentives  Act will be amended by the end of 2011. 
 
  
_______________G/SCM/N/226/KNA 
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ATTACHMENT I 
 
SCHEDULE 1 
 
MEMBER STATES 
 
( a )  A n t i g u a       J a m a i c a   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 )  A n t i g u a       J a m a i c a  
Barbados     Montserrat 
B e l i z e       S t .  L u c i a  
Dominica     St. Vincent   G/SCM/N/226/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-factory) 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/226/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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