WORLD TRADE  
ORGANIZATION  G/SCM/N/123/KNA 
G/SCM/N/128/KNA 25 July 2005 
 
(05-3352) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:I 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  
 
Updating Notification  
 
SAINT KITTS AND NEVIS 
  
 The following communication, dated 20 July 2005, is being circulated at the request of the 
Ministry of Foreign Affairs & International Trade of St. Kitts and Nevis.  
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G/SCM/N/128/KNA Page 2 
 
 
 Official Notification
 
  
1. Title of the programme for which extensi on is requested pursuant to procedures in 
G/SCM/39 . 
 
 The Fiscal Incentives Act No. 17 of 1974. An  Act to provide incentives to industry 
 
2. Period covered by the notification.  
 
The programme description is as of 30 June 2004 to 30 June 2005.  
 
3. Policy objective and/or purpose of the study  
 
 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 is to be promoted in  order to ensure the ec onomy 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 fixed sum or fluctuating amount per unit and, if the 
latter, how the amount is determined.  
 
 The main beneficiaries of the fiscal incen tives scheme are manufacturing and agro-processing 
enterprises.    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 gene rated. In this respect, the Act classifies these 
approved enterprises as follows: 
 
• Group I enterprises, where the local value added is 50% or more of sales, may enjoy a 
tax holiday of up to 15 years; 
 
• Group II enterprises, where local value adde d is between 25% and 50% of sales, may 
enjoy a tax holiday of up to 12 years; 
  G/SCM/N/123/KNA 
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 • Group III enterprises, where local value added is between 10% and 24% of sales, may 
enjoy a tax holiday of up to 10 years; 
 
• Enclave enterprises, where production is ex clusively 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.  Relief is provided for non-traditiona l exports to all countries;  however, in the case 
of exports to Guyana, Jamaica and Trinidad and T obago, the period of relief is of only five years 
immediately following the expiration of the tax holiday period.  
(Schedule II part two of the Act attached explain s 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 subsidy per unit.  Further, there is  no provision in our annual budget to determine the 
amount of funds allocated to this form of benefit provided for approved enterprises because the nature 
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 2002-2004. 
Year Imports ($EC) Exports ($EC) Re-Exports 
2002 544.6 million 94.8 10.6 
2003 553.5 million 122.6 9.5 
2004 (to be provided) (to be provided) (to be provided) 
 Please note that the figures quoted above are not a representation of the exports benefiting 
from the Fiscal Incentives Act, but rather, total exports. 
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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 and 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 21 but under 41 41 but under 61 
61 and over 25% 
35% 45% 
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".  G/SCM/N/123/KNA 
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(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 (e x-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 goods sold during that year. 
  
SCHEDULE III
 
 
TAX HOLIDAY PERIODS  
 
Classification of Approved Enterprise Group  Tax Holiday Period Years  
 
Group I Enterprise 
Group II Enterprise 
Group III Enterprise 
Enclave Enterprise 15 
12 
10 
15 
           W . F .  G l a s f o r d  
         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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