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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.

 

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Meet the team
Kevin Walmsley BA (Hons) ACA FCCA CF

Managing Partner of Heathrow, Director of WK Corporate Finance

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