WORLD TRADE  
ORGANIZATION  G/SCM/N/211/KNA 
9 August 2010 
 (10-4246) 
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 6 August 2010,  is being circulated at the request of the 
Delegation of Saint 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 2010, 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.   G/SCM/N/211/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 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 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 local value added is between 25 per cent and 49 per cent of 
sales, may enjoy a tax holiday of up to 12 years;   
 
iii. Group III enterprises, where the local value added is between 10 per cent and 24 per cent 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  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. 
  G/SCM/N/211/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 2000-2009.    
Value (EC$ millions) of St. Kitts-Nevis' Foreign Trade with World Partners 
for the period 2000-2009 
 
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 737.2 85.5 7.3 
2008 877.0 116.1 23.6 
2009 739.7 83.2 31.3 
 
10. Saint Kitts and Nevis' Action Plan in Acco rdance with the Decision of the General Council 
(WT/L/691 ) 
  Since last year's notification, 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.  
 Accordingly, St. Kitts and Nevis, like the other Members of the Organisation of Eastern 
Caribbean States (OECS) has benefitted from tec hnical assistance provided by the Commonwealth 
Secretariat.  The objective of this assistance was to provide options for reforming the areas of the 
legislation that are incompatible with the SCM Agreement.   
 A critical component of the action plan for 2010-2011 is the removal of the export 
performance of beneficiaries as part of the criteri a for accessing the subsidy.  Consultations will 
intensify at the national and sub regi onal levels to ensure that legislative action is taken to comply 
with procedures for the continuation of the extension of the programme.   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 cu rrently applied.  The most recent information was 
communicated at the quarterly luncheon of the Manufacturer's Division of the Chamber of Industry and Commerce, which was held on 23 June 2010.   It is anticipated that the Fiscal Incentives Act will be amended by the second quarter of 2011. 
 
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 G/SCM/N/211/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 
 Belize St. Lucia 
 Dominica St. Vincent    
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 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 
  G/SCM/N/211/KNA 
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  (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 th e 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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