International
Expertise. Understanding. Passion.
To the outside world, the Caribbean is generally thought of as a tax haven, with low or no taxes. While this is true of some jurisdictions, many others have quite high tax rates. In addition, non-residents looking to buy property will often need to obtain a permit – an Alien Landholder’s Licence – to allow them to make the purchase. Government fees charged for such licences are generally based on the value of the property being purchased, and can amount to as much as 10% of the cost.
Similarly, most Caribbean countries impose a transfer tax or
stamp duty on property purchases, often on both the buyer and seller.
Tax rates can be as high as 10% of the price.
Another feature of many jurisdictions is the International
Business Corporation (IBCs). These are “offshore” companies that are
incorporated under local laws but have a guarantee of exemption from
tax for, typically, a minimum of twenty years. Features of the IBC
regime commonly include a prohibition on trading within the country of
incorporation, an option to pay some tax on corporate income so that
tax treaties can be used to shelter profits and privacy as to
shareholders, company officers, etc.
Most countries in the Leeward and Windward Isles are members of
the Caribbean Common Market (Caricom). Caricom operates a consistent
external level of import duties and tariffs, but there are still duties
charged in respect of imports/exports of locally produced goods from
one country to another. The Caricom treaty also provides for double
taxation relief for income and corporate taxes and sets maximum rates
of withholding taxes on interest payments, dividends and royalties.
Many jurisdictions have fiscal incentives to encourage inward
investment, especially in the hotel and tourism sector, and also for
manufacturing. Local legislation may also allow the government to agree
specific concessions for particular projects, such as waiving import
duties for plant needed for constructing hotels, waiving or reducing
stamp duty and alien landholders’ licence fees, and so on.
