WORLD TRADE  
ORGANIZATION  G/SCM/N/155/LCA 
G/SCM/N/160/LCA 9 July 2007 
 
(07-2920) 
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  
 
Extension Under SCM Article 27.4 of the Transition Period for the  
Elimination of Export Subsidies Pursuant to the Procedures  
in Document G/SCM/39  
 
 
SAINT LUCIA 
   The following communication, dated 2 July 2007,  is being circulated at the request of the 
Delegation of Saint Lucia. G/SCM/N/155/LCA 
G/SCM/N/160/LCA Page 2 
 
 
  I. FISCAL INCENTIVES ACT 
 
1. Title of the subsidy programme, if relevant,  or brief description 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, 2007.   
 
3. Policy objective and/or purpose of the subsid y to stimulate export performance, support 
investment and economic activity, promote diversification in traditional and non 
traditional products.4.  Background and authority for the subsidy (including 
identification of the legislation under which it is granted). 
 
 The Fiscal Incentives Act, No 15 of 1974 was pass ed to give effect to an agreement on the 
harmonization of fiscal incentives to industry among CARICOM member countries.    
4. Form of subsidy (i.e. Gran t, loan, tax concession, etc.). 
 
 Income tax exemption;  exemption from import duty; exemption from import duty on plant, machinery, spare parts and raw materials;  exemp tion from income tax on export profits and an export 
allowance.    5. To whom and how the subsidy is provide d (whether 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 Ca binet 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.   
 Enclave Enterprise   The foregoing categories are segregated on the basis of the local value added component as 
follows (not practiced):   
 
 Group I Enterprise – Local Value added at least 50 per cent of the amount realized from sales of an approved product;   
 
 Group II Enterprise – Local Value added at least 25 per cent of the amount realized from the 
sales of the product;   
 
 Group III Enterprise – Local Value added at least 10 per cent of the amount realized from the sales of the product.     G/SCM/N/155/LCA 
 G/SCM/N/160/LCA 
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   Enclave Enterprises produce exclusively fo r export to markets outside CARICOM.  
Incentives are realized through reve nue foregone, whether import duty or  income tax.  An approved 
enterprise may also be granted a complete or pa rtial exemption from income tax (tax holiday) from 
the day  on which it commences production of an approved product.  The duration of the exemption is 
as set out in No. 8 below.  Export Allowances are granted only after the expiry of the aforementioned 
tax holiday and up to a maximum of 5 years, at the following rates:     (Export Profits as a % of  (Allowance as a % of  Income 
 total profits)    Tax on Export Profits) 
 
 10% but under 21%    25% 
 21% but under 41%    35%  41% but under 61%    45%  61% and over     50% 
 
 Export Profit is calculated using the formula (P x E)/S.  P represents chargeable profits made 
by the enterprise.  E represents proceeds from e xport sales.  S represents proceeds from all sales 
during the year of income.   
 
6. 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.   
 
 It is not a practice to maintain records of revenue foregone in relation to fiscal incentives 
granted.  Also, there are no provisions in the annual budget for either actual or estimated revenue 
foregone.  We have been informed  that there may be some distortion in the figures reported below 
including a substantial element pertaining to services  and Government and may not be considered as a 
fair estimate of revenue forgone for fiscal years indicated, they can however serve as a guide:    
[2005 = $77.8 million  provisional, 2 006 = $43.6 million provisional]. 
 
7. Duration of the subsidy and/or any oth er 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 intensive industry".  Such enterprises, where applicable, can 
qualify for the same level of benefits as Enclav e Enterprises.  The Fiscal Incentives Act became law 
on 23 April 1974.   G/SCM/N/155/LCA 
G/SCM/N/160/LCA Page 4 
 
 
  8. 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 include statistics of production consumption, importers and exports of the subsidize product(s) or Sector(s).   
 
 Exports   2004 - EC$215.41million     2005 - EC$173.32million     2006 - EC$141.78million (Provisional)  
 Imports (FOB)   2004 - EC$1001.23million 
    2005 - EC$1146.07million     2006 - EC1406.64million (Provisional)  
II. MICRO AND SMALL SCALE BUSINESS ENTERPRISES ACT 
 
1. Title of the subsidy programme, if relevant,  or brief description or identification of the 
subsidy.   
 
 The Micro and small scale Business Enterprises Act, No. 19 of 1998.  An Act to provide 
support to micro and small scale enterprises.   
 
2. Period covered by notification. 
 
 June 30, 2007.    3. Policy objective and/or purpose of the subsidy. 
 
 To provide a legislative base for micro and small scale business enterprises, to make 
provision for developmental support and financial relief with resp ect to micro and small scale 
business enterprises.    4. Background and authority for the subsidy (including identification of the legislation 
under which it is granted). 
 
 The Government of St. 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.   
 
Authority – Micro and Small Scale Business Act No. 19 of 1998. 
 
1. Form of subsidy (i.e. Gran t, loan, tax concession, etc.) 
  Similar to incentives provided in the Fiscal In centives Act, No. 15 of 1974, i.e. income tax 
exemption from import duty and exemptions from inco me tax on export profits.  However, income tax 
relief will be in accordance with section 68 of the Income Tax Act of 1989.   
 
2. To whom and how the subsidy is provide d (whether 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.    G/SCM/N/155/LCA 
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  3. 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.    
4. Duration of the subsidy and/or any oth er limits attached to it, including date of 
inception/commencement.   
 
 In accordance with terms in the Fiscal Incentives Act of 1974, as applicable.   
 
5. Statistical data permitting an assessment of  the 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 description or identification of 
subsidy.   
  An Act of parliament for the establishment and operation of Free Zones in St. Lucia.   
 
2. Period covered by the notification.   
 
 June 30, 2007.    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.   
 4. Background and authority for the subsidy (including, 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 employment  levels through the creation of new ventures and to 
improve the distribution of income.   
 
5. Form of subsidy (i.e. gran t, 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 na tionals employed on a continuous basis.   
 
 Exemption from income tax during the first 5 years of operations.   G/SCM/N/155/LCA 
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 Total net losses over the 5 year tax holiday may 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 provide d (whether 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 concessions 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 Ju ly 2000.  To date, the only tenants are 
merchants and distributors.  There are no industri es or manufacturers operating from that site.   
 
8. Duration of the subsidy and/or any oth er 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.  
9. Statistical data permitting an assessment of the 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 determin able 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.   
 
10. Statistical data. 
 
 There is no data available to date in the format required.     
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