WORLD TRADE  
ORGANIZATION  G/SCM/N/155/KNA/Suppl.1 
G/SCM/N/177/KNA 18 July 2008 
 
(08-3473) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
New and Full Notification Pursuant to Article XVI:1  
of the GATT 1994 and Article 25 of the Agreement  
on Subsidies and Countervailing Measures  
 
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 communication, dated 11 July 2008, is being circulated at the request of the 
Delegation of Saint Kitts and Nevis.  
 
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G/SCM/N/177/KNA Page 2 
 
 
  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  2008 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 diversificati on 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.    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 Industry and Commerce.  
Applications for incentive benefits are submitted to the aforementioned Ministry, which recommends 
to Cabinet the level a nd 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 approved enterprises.  The duration of these concessions is in accordance with the local value added genera ted.  In this respect, the Act classifies these 
approved enterprises as follows:   
 
i. Group I  enterprises, where the local value added is 50 per cent or more of sales, may 
enjoy a tax holiday of up to 15 years;   
 
ii. Group II  enterprises, where the lo cal value added is between 25 per cent and 49 per 
cent of sales, may enjoy a tax holiday of up to 12 years;    G/SCM/N/155/KNA/Suppl.1 
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  iii. Group III enterprises, where the local value added is between 10 per cent 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 appr opriate 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 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) 
 
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 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 2000-2007.    G/SCM/N/155/KNA/Suppl.1 
G/SCM/N/177/KNA Page 4 
 
 
  Value (EC$ millions) of St. Kitts-Nevis' Foreign Trade with World  
Partners for the period 2000-2007 
 
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 85.4 7.3 
 
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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   
 
    
 
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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 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 
 
(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 th e year of income there shall be deducted any 
excise duty paid on the goods sold during that year.     G/SCM/N/155/KNA/Suppl.1 
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  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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