Nevis is a sound and reliable jurisdiction, and displays best practices in its eﬀort to maintain a legal and regulatory framework that meets current international standards of regulation and transparency. Nevis continues to ensure that it is a well-managed and properly regulated International Financial Centre (IFC), compliant with all international regulatory standards. Nevis remains resilient, going from strength to strength, amidst the ever-changing international regulatory agenda, associated compliance costs and the pressures of the developed economies, faced by Caribbean jurisdictions and IFCs on a whole.
The Federation of St. Kitts and Nevis (the ‘Federation’) is classified as largely compliant by the Organisation for Economic Co-operation and Development (OECD). This classification is demonstrative of the Federation’s continued commitment to meeting international standards of regulatory compliance and transparency in all its operations. The Federal Government committed to the implementation of the OECD Common Reporting Standard (CRS), which eﬀectively extends FATCA style reporting to the OECD members who have implemented the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. The Common Reporting Standard (Automatic Exchange of Financial Account Information) Act together with its enabling regulations were enacted in 2016. Further to the measures and mechanisms in place, the first automatic exchange of information occurred in September 2018. The Federation has exchange of information relationships with 38 jurisdictions through 15 formal double taxation conventions (DTCs) and 24 tax information exchange agreements (TIEAs). This process is ongoing, as the Federation continues to further engage other jurisdictions regarding exchange of information. The Federation is a member of the Inclusive Framework on Base Erosion and Prof t Shifting (BEPS). The Caribbean Financial Action Task Force (CFATF) has noted the Federation as a jurisdiction which has established the legal and regulatory framework to meet its commitments in its agreed Action Plan, and of which no longer requires monitoring by the International Cooperation Review Group (ICRG). T is conf rms the Federation’s commitment to introduce and implement recommended standards, for combating money laundering and the financing of terrorism.
Transparency: Access to and Exchange of Information
Both the OECD and the Financial Action Task Force (FATF) have assessed the jurisdiction’s compliance status as being largely in line with international requirements to counter money laundering and terrorist financing, and as to disclosure and maintenance of adequate records that would identify beneficial owners by competent authorities making the appropriate enquiries. Disclosure of information is permitted for the purpose of pursuing allegations of wrongdoing by the competent authorities under enabling legislation. Disclosure of information is also permissible through the use of court proceedings, under which a court order may be obtained to compel disclosure where a right to disclosure arises. Under the laws of Nevis, there are adequate measures for disclosing the identity of beneficial owners to treaty, law enforcement and regulatory counterparts, in circumstances where legitimate enquiries are being made by the relevant authorities of jurisdictions that are parties to the treaties and agreements to which the Federation is a party. Legislative provisions also exist to sanction any entity incorporated in Nevis which is proven by local or foreign law enforcement to be involved in criminal or illicit activity. Save in such instances, confidential information held on a Nevis entity by the Nevis Regulator or by any licensed service provider in Nevis, may not be disseminated to any person not legitimately connected.
International Business Corporations and Limited Liability Companies
It is important to be aware of the various benefits and advantages of corporate entities being proposed to be used in a structure that one would wish to implement, while undertaking commercial aﬀairs. An international business corporation (IBC) in Nevis is governed by and operates under the Nevis International Business Companies Ordinance 2017 (NBCO). Nevis also oﬀers the formation of limited liability companies (LLC) under the Nevis Limited Liability Companies Ordinance 2017 (NLLCO). Both IBCs and LLCs are ﬂexible wealth planning vehicles and useful for investment holding purposes. Confidentiality is a key feature, insofar as records of the directors and shareholders, in the case of the IBCs, and managers and members in the case of the LLCs are not publicly available. As international entities, they are prohibited from conducting business in the Federation. By virtue of not conducting business within the Federation, they are tax exempt and not subject to the local tax and licensing regime. IBCs and LLCs may apply to the Minister for a tax resident certificate and elect to pay a corporate residency tax in order to be eligible to be considered a tax resident in Nevis. The corporate residency tax payable by an IBC or an LLC shall be assessed on the gross revenue of that entity and be charged at a rate equivalent to the current tax rate charged for unincorporated business tax on Nevis. The current tax rate is four per cent.
International Exempt Trusts and Multiform Foundations
The use of Nevis international exempt trusts and multiform foundations remain popular options, useful for wealth and estate planning, financing, charity and investment holding purposes. Confidentiality remains a key feature. International trusts in Nevis are registered under the Nevis International Exempt Trust Ordinance, CAP. 7.03N,as amended (2015) (NIETO). NIETO is comprehensive and includes special provisions that make Nevis a preferred jurisdiction for establishment of asset protection trusts. Multiform foundations in Nevis may be established under the Nevis Multiform Foundations Ordinance, CAP 7.08N (NMFFO). A multiform foundation is a useful alternative to trusts insofar as it operates as a separate legal entity. The multiform foundation is managed by a management board on behalf of its beneficiaries and according to a def ned constitution. Under the NMFFO, a foundation may take the form of an ordinary foundation, a trust, a business corporation, a limited liability company or as a partnership. Such form can be changed during the lifetime of the foundation. Similar to IBCs and LLCs, a multiform foundation is tax exempt by default, but upon application, may elect to become tax-resident of Nevis and pay taxes at a maximum rate of one per cent, if desired.
Nevis has a wide range of products and is open for business. Nevis as a jurisdiction, continues to demonstrate that it is well-regulated and current with international best practices. Nevis has a sterling reputation and continues to focus on developing its regulatory regime and ensuring ongoing compliance.
Elizabeth Harper is a partner at Daniel Brantley, Nevis. Her practice areas include Banking & Finance, Commercial and Offshore Trust, Civil and Commercial Litigation, Company Law and Corporate Law. Her client base consists of numerous international banks, corporations and corporate trustees whom she advises on various banking, commercial, trust, financial, regulatory and securitization matters. Elizabeth’s recent accolades include being in the ranking ‘Leaders in their Field’ for the Chambers and Partners Global Guide 2018. Elizabeth has been previously recognized as a leading asset recovery lawyer in the directory Who’s Who Legal: Asset Recovery 2014.