St Vincent and the Grenadines – Seeking a Prosperous Future

St Vincent and the Grenadines (SVG) as a low tax jurisdiction is nothing new.  As far back as 1976 the first laws for international companies were passed before the country became fully independent.  This was undertaken in conjunction with Swiss-based lawyers who registered the St Vincent Trust Service in Zurich, Switzerland and the Government established the St Vincent Trust Authority in Kingstown.

During 1993 the Jeeves Group from Liechtenstein acquired the St Vincent Trust Service, Zurich.  This let to a complete overhaul of the organisation and to new legislation being passed by the Government at the end of 1996 in conjunction with the main players in the industry.

From 1997 the rate of new registrations increased remarkably and was only hindered by the turbulences caused by the blacklisting of SVG in 2000, along with 44 other jurisdictions considered by the Financial Action Task Force (FATF) to be inadequate in counter money laundering legislation.  Appropriate legislation and supervision was agreed which led to SVG being removed from the blacklist in 2003.

The current global financial crisis led the G20 Meeting in London 2009 to mandate the OECD Secretariat to create a new ‘Grey List’ of countries, where the exchange of information was considered inadequate; SVG was placed on this list and faced the arduous task of attaining at least 12 acceptable Tax Information Exchange Agreements (TIEAs) by March 2010.

Due to an excellent team effort by the Government, led by Prime Minister Dr the Hon Ralph Gonsalves, the authorities led by Sharda Sinanan-Bollers of International Financial Services Authority (IFSA) and the private sector, SVG, as of July 2010, has 20 TIEAs in place.  The agreements have been concluded with: Aruba, Australia, Austria, Belgium, Canada, Denmark, Faroe Islands, Finland, France, Greenland, Germany, Iceland, Ireland, Liechtenstein, New Zealand, Netherlands, Netherland Antilles, Norway, Sweden, and the United Kingdom.  SVG was therefore white listed by the OECD in March, 2010.

The next step for the OECD will be the Peer Review process, whereby countries will be assessed to see if they have in fact implemented the legal and regulatory framework for the exchange of information.  SVG is currently undergoing Phase 1 of the Peer Review process and the Government will seek to ensure that the necessary steps are taken.

This move forward is a major step for SVG as it illustrates its commitment to the various international standards and best practices.  The private sector is well served by a supportive Government and exceptionally well run authorities.  IFSA is headed by Sharda Sinanan-Bollers and the Financial Intelligence Unit (FIU) is run by Grenville Williams and both institutions are considered by professionals to be among the best.

During a recent UN Session, the SVG Ambassador C Gonsalves courageously pointed out to the General Assembly, the discrimination with respect to smaller nations and the requirement of co-operation with respect to various standards set.  The Sovereign Prince of Liechtenstein, HSH Hans Adam II, raised the same subject of small states co-operating in a speech to the UN Assembly over a decade ago. Nevertheless smaller countries such as SVG will have to watch future developments very closely as in the latest round of G20 meetings renowned economies such as Switzerland, Singapore, Austria and Belgium were not spared the rod.

SVG must, and is, moving with the times.  The Government continues with its efforts to provide the infrastructure and legislation required and to continually improve on such.  It is for the private sector to design new innovative compliant products.  The private sector can only do this if they have the assurance of the full support and response by the Government, which is demonstrably the case in SVG. 

The international industry is also facing the future with a range of new compliant products, using amongst other things the three fields that remain unchallenged, namely the last will and testament or letter of wishes, insurance products and investment programmes.  All these vehicles can be structured in a complaint manner and can be effectively used for asset protection and estate management.  Tax incentives in any form will apply to citizens and foreign residents equally avoiding any ‘ring-fencing’ claims by the OECD.

Segregated cell companies form a much sought after aspect of the mutual fund business in SVG allowing mutual funds to accommodate wide ranging investment objectives, take advantage of economies of scale and minimize the exposure of any one investor group to the risks attributable to other investor groups.

Innovative products and approaches are now required and as ever excellent personal service, so that the wide spectrum of a financial services sector, including shipping, company, trust and mutual fund registrations, to mention the main elements, may prosper in the future.