international tax summaries——ST. VINCENT AND THE GRENADINES（1998）
INCOME TAXES ON CORPORATIONS
1. Rates
The basic corporate rate of tax is 40% of taxable income. A reduced rate is applicable to companies that manufacture goods for export. The rates are as follows:
q On the chargeable income from exports to the Organization of Eastern Caribbean States (O.E.C.S.) market?5%;
q On the chargeable income from exports to the non-O.E.C.S. Caricom markets?0%;
q On the chargeable income from exports to the extra-Caricom market?0%.International companies are required to pay a small fixed registration fee and fixed annual charges in lieu of income taxes, and to pay tax on dividend distributions to nonresidents. (Also see item 6.)
Normal company income includes dividend income, but resident corporations receive a rebate of tax on dividends received from other resident corporations so that, effectively, no tax is paid.
2. Local Income Taxes
None.
3. Capital Gains Taxes
None.
4. Branch Profit Taxes
Branches of foreign corporations are subject to corporation tax at full rates on the profits of the branch. The after-tax profits of a nonresident company carrying on business through a branch or agency are deemed to be remitted in full and, therefore, are liable to withholding tax (see item 17), except to the extent that the profits have been reinvested in St. Vincent, other than in the replacement of fixed assets or in short-term bank notes.
5. Foreign Tax Reliefs
St. Vincent residents receiving income from foreign sources are entitled to a foreign tax credit calculated in accordance with the provisions of any existing treaties. Where income has accrued to a resident on which income tax has been paid under the
laws of another country with which no treaty exists or, where treaties do exist, if the income received has not been specifically provided for, relief is granted to the extent of the lesser of the tax payable in the other country or the tax payable in St. Vincent.
6. Classification of Corporations
Corporations are classified for St. Vincent tax purposes as a resident or nonresident corporation and as a public or private corporation. A resident corporation is one which is incorporated in St. Vincent, or carries on business in St. Vincent, and has either:
q Its central management and control in St. Vincent; or
q Its voting power controlled by shareholders who are residents of St. Vincent.The distinction between resident and nonresident corporations is important in that St. Vincent residents are subject to tax on their worldwide income whereas nonresidents are only subject to tax on their St. Vincent-source income. The distinction also has a bearing on the treatment of dividend income (see item 1).
Resident and nonresident corporations are divided into public and private corporations. Generally, public corporations are those whose shares are listed on a stock exchange or are subsidiaries of listed corporations. All other corporations are private. Currently, both public and private corporations pay income tax at 40%, except for international business companies.
Companies formed in St. Vincent qualify as international companies if they do not engage in buying or selling goods or providing services in St. Vincent and if no resident of St. Vincent receives directly more than one-tenth of the total assets, issued share capital, issued loan capital or interest, dividends or other consideration payable in respect of any loan or preference shares. Qualifying international business companies, as well as banks and trusts, are not subject to any corporate tax, capital gains tax, or similar taxes on income originating outside of St. Vincent.
7. Payment of Tax
Corporations are required to pay tax in installments that are based on the preceding year chargeable income or the latest year for which an assessment has been raised. In the case of a corporation not previously assessed to tax, the tax payable is based on the estimated income for the current year. The installments are payable as follows:
q The first three installments by June 30, September 30, and December 31 of the income year forming the basis period for the year of assessment;
q The fourth installment by March 31 in the year of assessment immediately following the basis period for that year of assessment. The fourth installment is an amount equal to one-quarter of the previous year charge if the return is not filed by March 31, or the balance of the t
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