WORLD TRADE  
ORGANIZATION  G/SCM/N/155/LCA/Suppl.1 
G/SCM/N/177/LCA 3 September 2008 
 
(08-4136) 
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 LUCIA 
   The following communication, dated 30 June 2008,  is being circulated at the request of the 
Delegation of Saint Lucia.   G/SCM/N/155/LCA/Suppl.1 
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  I. FISCAL INCENTIVES ACT 
1.   Title of the subsidy prog ramme, if relevant, or brief descr iption or identification of the 
subsidy  
 
Fiscal Incentives Act, No. 15 of 1974 – An Act of Parliament to provide incentives to 
industry. 
 2. Period covered by the notification
 
 
 June 30, 2008 
 3. Policy objective and/or purpose of the subsidy
 
 
 To stimulate export performance, support i nvestment and economic activity, promote 
 diversification in tradition al and non-traditional products. 
 4. Background and authority for the subsidy (inclu ding identification of the legislation under 
 which it is granted  
 
 The Fiscal Incentives Act, No. 15 of 1974 was passed to give effect to an agreement on the 
 harmonisation of fiscal incentives to industry among CARICOM member countries. 
 5. Form of subsidy (i.e. Gran t, loan, tax concessions, etc.) 
 
 Income tax exemption; exemption from import duty; exemption from import duty on plant, 
 machinery, spare parts and raw materials; exemption from income tax on export profits and 
 an export allowance. 
 6. To whom and how the subsidy is provided (w hether to producers, to exporters, or others 
 through what mechanisms; whether a fixed or fluctuating amount per unit; if the latter, how 
 determined ) 
 
 Fiscal Incentives are provided to enterprises involved in manufacturing or processing, deep- sea fishing and shrimping where they form part  of an integrated processing operation.  
 Applications for incentives under this Act are approved by the Cabinet of Ministers.  An 
 approved enterprise may be granted a benefit if  classified in one of the following categories: 
 
(a)  Group I Enterprise 
(b)  Group II Enterprise 
(c)  Group III enterprise 
 
 Saint Lucia has no programme of subsidies contingent upon the use of local goods.  Since 
 local value added refers to local labour and not  goods, in our opinion this is not a prohibited 
subsidy under Article 3.2b of the ASCM.  While  reference is made in our Fiscal Incentives 
Act No. 15 of 1974 to local value added, this  must not be confused with the generally 
accepted definition of local content.  Instead it reflects the concern of the Government of 
Saint Lucia that employment be created and th at the economy be diversified.  Consequently, 
the provision is applied according to the numbe r of local persons employed in a domestic 
enterprise and expressed as a percentage of sales, for purposes of relief. 
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  There are currently no plans in place to ph ase out these programmes which are essential for 
the attraction of investment and the survival of the manufacturing sector.  We intend to continue to implement the existing progra mmes in keeping with our WTO obligations, 
including provisions governing the phase-out of  such programmes.  However, this will have 
to be conducted over an extended period give n the smallness and extreme fragility of our 
economy and manufacturing sector. 
  7. Subsidy per unit, or in cases where this is not possible, the total amount budgeted for that 
subsidy (indicating, if possible, the average subsidy per unit in the previous year) where 
provision of per unit subsidy, information (for the year covered by the notification for the 
previous  
 
It is not a practice to maintain records of re venue foregone in relation to fiscal incentives 
granted.   Also, there are no provisions in th e annual budget for either actual or estimated 
revenue foregone.  However on the basis of information obtained from the Ministry of 
Finance the following represents a fair estimat e of revenue forgone for fiscal years as 
indicated, to the nearest million: 
 8. Duration of the subsidy and/or any other limits attached to it, including date of 
inception/commencement  
 
Group I Enterprise  - 15 years Tax Holiday Group II Enterprise  -  12 years Tax Holiday Group III Enterprise - 10 years Tax Holiday  
Enclave Enterprise  - 15 years Tax Holiday 
An enterprise with capital investment of not less than twenty-five million Eastern Caribbean 
dollars is considered as a “highly capital in tensive industry”.  Such enterprises, where 
applicable, can qualify for the same level of benefits as Enclave Enterprises.  The Fiscal 
Incentives Act became law on 23 April 1974. 
9. Statistical data permitting an assessment of the trade effects of the subsidy.  The specific 
nature and scope of such statistics is left to  the judgment of the notifying member.  To the 
extent possible relevant such information in cluding statistics of production consumption, 
importers and exports of the s ubsidize product(s) or Sector(s)  
 
It is not the practice to maintain records of revenue foregone in relation to fiscal incentives 
granted.  Also, there are no provisions in th e annual budget for either actual or estimated 
revenue foregone.  However on the basis of information obtained from the Ministry of 
Finance the following represents a fair estimat e of revenue forgone for fiscal years as 
indicated, to the nearest million: 
2005 – EC$77.8 (PROVISIONAL) 
2006 – EC$43.6 (PROVISIONAL) 
2007 – EC$46.5 (PROVISIONAL) 
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  10. Duration of the subsidy and/or any other limits attached to it, including date of 
inception/commencement  
  Group I Enterprise  -  15 years Tax Holiday 
 Group II Enterprise  -  12 years Tax Holiday 
 Group III Enterprise -  10 years Tax Holiday   Enclave Enterprise  -  15 years Tax Holiday  
An enterprise with capital investment of not less than twenty-five million Eastern Caribbean 
Dollars is considered as a “highly capital in tensive industry”.  Such enterprises, where 
applicable, can qualify for the same level of benefits as Enclave Enterprises.  The Fiscal 
Incentives Act became law on 23 April, 1974. 
 
11. Statistical data permitting an assessment of the trade effects of the subsidy.  The specific 
nature and scope of such statistics is left to  the judgment of the notifying member.  To the 
extent possible relevant such information in clude statistics of production consumption, 
importers and exports of the s ubsidize product(s) or Sector(s ) 
 
 Exports  2005 – EC$184.06 million (Revised)   2006 – EC$251.14 million (Revised)    
  2007 – EC$297.92 million (PROVISIONAL)   Imports (c.i.f.)  2005 – EC$1302.36 million (Revised) 
  2006 – EC$1598.46 million (Revised)   
  2007 – EC$1662.31 million (PROVISIONAL) 
 
II. MICRO AND SMALL SCALE BUSINESS ENTERPRISES ACT 
 
1. Title of the subsidy programme , if relevant, or brief descri ption or identification of the 
subsidy  
 
The Micro and Small Scale Business Enterpri ses Act, No. 19 of 1998.  An Act to provide 
support to micro and small-scale enterprises.    
 2. Period covered by notification
 
 
  30 June 2008  3. Policy objective and/or purpose of the subsidy
 
 
To provide a legislative base for micro and sm all scale business enterprises, to make provision 
for developmental support and fina ncial relief with respect to micro and small scale business 
enterprises. 
 
4. Background and authority for the subsidy (inclu ding identification of the legislation under 
which it is granted ) 
 
The Government of Saint Lucia found it necessary to encourage and support investment flows 
in this sub-sector, in order to promote economic activity particularly in the area of self-employment and contribute to the alleviation of poverty. 
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   Authority – Micro and Small Scal e Business Act No. 19 of 1998. 
 5. Form of subsidy (i.e. Gr ant, loan, tax concession, etc
.) 
 
Similar to incentives provided in the Fiscal Incentives Act, No. 15 of 1974, i.e. income tax 
exemption from import duty and exemptions fro m income tax on export profits.  However, 
income tax relief will be in accordance with  section 68 of the Income Tax Act of 1989. 
 
6. To whom and how the subsidy is provided (w hether to producers, to exporters, or others, 
through what mechanisms; whether a fixed or fluctuating amount per unit; if the latter, how 
determined ) 
 
To micro and small-scale businesses as described in the Act.  Relief would be granted in a 
similar manner as pertains to the Fiscal Incentives Act, No. 15 of 1974. 
 
7. Subsidy per unit, or in cases where this is not possible, the total amount budgeted for that 
subsidy (indicating, if possible, the average subsidy per unit in the previous year) where 
provision of per unit subsidy, information (for the year covered by the notification for the 
precious year, or both) is not possible, a full explanation  
 
 There is no available data. 
 
8. Duration of the subsidy and/or any other limits attached to it, including date of 
inception/commencement  
 
 In accordance with terms in the Fiscal  Incentives Act of 1974, as applicable. 
 
9. Statistical data permitting an assessment of th e trade efforts of the subsidy.  The specific 
nature and scope of such statistics is left to  the judgment of the notifying member.  To the 
extent possible relevant and/or determinable however it is desirable that such information 
include statistics of production consumption,  importers and exports  of the subsidize 
product(s) or Sector(s ) 
  There is no available data.  
III.  FREE ZONE ACT 
 
1. Title of the subsidy programme , if relevant, or brief descripti on or identification of subsidy
 
 
An Act of Parliament for the establishment a nd operation of Free Zones in Saint Lucia. 
 2. Period covered by the notification
 
 
 30 June 2008.  3. Policy objectives and/or purpose of subsidy
 
 
To foster commerce, trade and investment with other countries; to promote economic growth 
and development and related matters. 
 
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  4. Background and authority for the subsidy (inc luding, identification of the legislation under 
which it is granted ) 
 
The Free Zone Act, No. 10 of 1999 was enacted as the result of the desire of the Government 
to stimulate growth in trade, increase employme nt levels through the creation of new ventures 
and to improve the distribution of income. 
 5. Form of subsidy (i.e. gr ant, loan, tax concession, etc
.) 
 
Exemption from import duty and other charges on plant, machinery and equipment, raw 
materials and goods to be sold or exported within the Free Zone Area.   Special Income Tax Concessions.  
Tax Credits in accordance with the number of nationals employed on a continuous basis. 
  Exemption from income tax during the first 5 years of operations.  Total net losses over the 5-year tax holiday ma y be carried forward and deducted against 
profits in the 3 years following the tax holiday. 
 
Proceeds from sale of stock or other partial or complete ownership are also exempted from income tax. 
 
6. To whom and how the subsidy is provided (w hether to producers, to exporters, or others, 
through what mechanisms; whether a fixed or fluctuation amount per unit; if the latter; how 
determined ) 
  To businesses established within a designated Free Zone Area.           Through tax c oncessions and revenue foregone. 
 
7. Subsidy per unit, or in cases where this is not possible, the total amount budgeted for that 
subsidy (indicating, if possible, the average subsidy per unit in the previous year) where 
provision of per unit subsidy, information  (for the year covered by the notification for the 
precious year, or both) is not possible, a full explanation  
 
The Free Zone Area became operational in July 2000.  To date, the only tenants are merchants 
and distributors. There are no industries or manufacturers operating from that site.  
8. Duration of the subsidy and/or any other limits attached to it, including date of 
inception/commencement  
 
 Income Tax – 5 years from date of establishment within the Free Zone Area.  Income Tax Credits – Indefinite.  However subject  to qualifications as prescribed in the Act.  
Import duty and associated charges – For the duration of tenancy. 
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  9. Statistical data permitting an assessment of th e trade efforts of the subsidy.  The specific 
nature and scope of such statistics is left to  the judgment of the notifying member.  To the 
extent possible relevant and/or determinable however it is desirable that such information 
include statistics of production consumption,  importers and exports  of the subsidize 
product(s) or Sector(s ) 
  There is no data available to date in the format required.  
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