WORLD TRADE  
ORGANIZATION  G/SCM/N/128/VCT1 
31 May 2005 
 (05-2216) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
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  
  
ST. VINCENT AND THE GRENADINES 
 
 
 The following communication, dated 3 May 2005, is being circulated at the request of the Ministry of Foreign Affairs, Commerce and Trade in St. Vincent and the Grenadines. 
 
_______________ 
  
1. Title of the subsidy programme , if relevant, or brief description or identification to be 
provided  
  Fiscal Incentives Act No. 5 of 1982 amende d by Act 20 of 1987 and Act 16 of 1991. 
 
 This is an Act to provide incentives to industry.  2. Period covered by the notification
 
  As of 1 July 2004 to 30 June 2005. 
 
3. Policy objective and/or policy purpose of the subsidy
 
  The objective and/or purpose of the subsidy ar e to stimulate international competitiveness, 
support investment, economic activity and promote diversification in traditional and non-traditional 
products. 
 4. Background and authority for the subsidy (inc luding identification of the legislation under 
which it is granted ) 
 
 The Fiscal Incentives programme finds its lega l basis in the Fiscal Incentives Act No. 5 of 
1982, amended by Act No. 20 of 1987 and Act No. 16 of 1991.  This Act was passed to give effect to 
an agreement on the harmonization of fiscal incentives to industry among CARICOM countries. 
 
                                                      
1 This notification has also been issued as document G/SCM/N/123/VCT, dated 12 May 2005. G/SCM/N/128/VCT 
Page 2  
 
Authority
 
 - Fiscal Incentives Act No. 5 of 1982 amended by - Act 20 of 1987 - Act 16 of 1991 
 
5. Form of subsidy (i.e. gr ant, loan, tax concession, etc
.) 
  The Fiscal Incentives Act provides for ta x concessions by way of the following: 
 
• Exemption of import duties, consumption taxes on plant, equipment, machinery, spare parts, 
raw materials, or components thereof, 
• Exemption of income tax 
• Exemption of income tax on export profits by way of tax credits. 
 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 Incentives scheme are manufacturing and agro-
processing enterprises.  This Incen tive scheme is managed and administered by the Ministry of 
Telecommunications, Science, Technology and Indust ry.  Applications for Incentive benefits under 
this scheme are submitted to the aforementioned Ministry, which recommends to Cabinet the level 
and type of concessions to be granted. 
  The Fiscal Incentives Act No. 5 of 1982, as ame nded by Act No. 20 of 1987 and Act No. 16 
of 1991, allows for the granting of tax holidays fo r the manufacture of approved products as approved 
products by approved enterprises and can be cl assified in five (5) categories as follows: 
 
(i) Group I Enterprises , up to 15 years, in which local value added is 50 per cent or more of 
sales; 
(ii) Group II Enterprises , up to 12 years, in which local value added is between 25 and 
50 per cent; 
(iii) Group III enterprises , up to 10 years, in which local value added is between 10 and 
25 per cent; 
(iv) Enclave Enterprises , up to 15 years, in which production is exclusively for export;  and 
 (v) Capital Intensive Enterprises , up to 15 years, if there is an investment of not less than 
US$25 million. 
 
The Act provides for income tax relief in the form of tax credits to enterprises once the tax holiday 
period has expired.  This relief is contingent on exportation and is granted on export profits of an 
enterprise accruing from its exports of the approve d products.  Relief is provided for non-traditional 
exports to all countries, however, in the case of e xports to Guyana, Jamaica and Trinidad and Tobago, 
the period of relief is only for five years immediately following the expiration of the tax holiday 
period.  Relief is granted if expor t profits amount to 10 per cent or more of the entire profit of the 
enterprise in accordance with the following:  G/SCM/N/128/VCT 
 Page 3 
 
 
 
Amount of export profits expressed as a percentage 
of the entire profits Maximum percentage of tax relief 
10% or more but less than 21% 25% 
21% or more but less than 41% 35% 
41% or more but less than 61% 45% 
61% or more 50% 
 
 Export profits is determined by the following formula:  
(E*P)/S 
Where 
  E represents proceeds from export sales  P represents profits made by the enterprise and 
 S represents the proceed of all sales 
 7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount 
budgeted for that subsidy (indicative, if possi ble, the average information (for the year 
covered by the notification, for the previous year, or both)) is not possible, a full explanation  
 
 The level of subsidies granted in 2001, 2002 and 2003 were EC$71,497,401.56, 
EC$45,685,715.90 and EC$56,203,219.83 respectively.  8. Duration of the subsidy and/or any other time limits attached to it, including date of 
inception/commencement  
 
 Please see "6" above.  9. Statistical data permitting an assessment of th e trade effects of the subsidy.  The specific 
nature and scope of such statistics is left to  the judgement of the Member.  To the extent 
possible, relevant and/or determinable, however, it is desirable that such information includes 
statistics of production, consumption, impor ts and subsidized product(s) or sector(s ) 
 (a) For the most three recent year s which statistics are available; 
 (b) For a previous representative  year, which, where possible and meaningful, should be the latest 
year preceding the introduction of the subsidy or preceding the last major change in the 
subsidy. 
  Total value of St. Vincent's exports and imports for the three most recent years.   
 
 Please note that this is not the exports benefiting in the same way under the Fiscal Incentives Act, but rather, total exports.  
__________ 
 Year Total Imports (EC$ ) Total Exports (EC$) 
2002 480,000,275 106,098,073 
2003 543,614,828 102,592,682 
2004 616,909,120 73,388,297