Nevis Continues to Attract Investment

In recent years, Nevis has successfully conquered many EU and OECD challenges including the accusation as having a harmful tax practice. The Nevis International Business Ordinance, as amended as at 2009, and the Nevis Limited Liability Company Ordinance, as amended as at 2009, provide for entities incorporated thereunder and which are used primarily as investment or holding companies to be exempted from taxes. The legislation also provided the option to companies incorporated thereunder to opt, if it so desired, to be a tax resident of the country of incorporation. These tax exemptions are noted as ‘grandfathered’ in until the middle of next year.

The International Financial industry on Nevis is governed by international Anti-money laundering, Anti-terrorism and exchange of information laws, and the Financial Services Regulatory Commission makes painstaking efforts to ensure that international standards are upheld and that service providers conduct business with integrity and accountability.

The international financial services sector is vital to Nevis’ economic stability, which means that it is dependent on a good reputation. In response to recent regulatory challenges, the jurisdiction happily devised a plan of action that would ensure that Nevis remains tax- compliant while at the same time maintaining its stance as a jurisdiction of choice for high net worth individuals interested in wealth management. This plan of action included amending the IBC/LLC legislation to remove the preferential tax provision granted to Nevis International companies.

Proposals being considered include:
1. Tax neutrality - Tax neutrality is sometimes used to describe a tax system that does not create a bias that could influence a taxpayer to choose one investment or course of action over another. A tax-neutral provision is one that permits the choice of investment or action to be made on the basis of market or personal considerations without influence from the tax laws. It is known that other international financial centres, such as Jersey, have successfully implemented this as part of their tax system.

2. Family Office - The family office concept provides High Net Worth families with the opportunity to create a bespoke platform to govern the investment and administration of family wealth for current and successive generations. This would be a new product offering which has been securely and successfully established in other IFCs.

3. Economic Substance requirement for entitles that fall under the International Financial Services Sector - With the implementation of “economic substance”, an entity would have to fulfil certain requirements. For example, it needs to be managed and directed in the jurisdiction; core income generating activities should be undertaken in the jurisdiction in relation to the relevant activity; it is required to maintain adequate physical premises in the jurisdiction; there are adequate employees in the jurisdiction with suitable qualifications; there is adequate expenditure incurred in the jurisdiction in relation to the relevant activity; and it is obliged to file an annual confidential economic substance report with the applicable authority in its jurisdiction which will assist the authority in assessing compliance.

4. Marrying the Citizenship by Investment Program (CIP) with an investment option specific to a Nevis project - Such project could be linked to an essential service on the island such as health care (state- of- the- art medical care facility) or energy (alternate form of power such as wind or solar).

5. Allowing prospective investors the opportunity for a combined residency/citizenship and wealth management programme - Previously, under the Nevis International Exempt Trust Ordinance (NIETO), an individual who obtained citizenship under the CIP could not be a Protector under the NIETO. With the newly proposed Trust Ordinance, an individual would be able to invest and, at the same time, set up a trust as part of their wealth management programme.
The monetary authority in St Kitts and Nevis is the Eastern Caribbean Central Bank. There are no limits on foreign exchange transactions and the government of Nevis is continuing to explore ways in which Nevis IBC’s and LLCs can operate tax efficiently in the future, as long as they do not undertake business within the Federation of Nevis. Additionally, investors have the option of investing in top notch real estate on the island (including Four Season Resorts Estate, the Hamilton Beach Villa and Spas & Cliffdwellers Villas). Investment made in one of these real estate developments in turn qualifies an investor who is desirous of participating in the citizenship by investment programs.

The key in choosing/implementing the appropriate regimen will be done with the Jurisdiction’s reputation and global footprint in mind. The key being to continue serving its existing clients whilst at the same time attracting new investors to enjoy a piece of paradise.

Maurisha A. Robinson
Maurisha A. Robinson is the co-founder and co-managing partner Morton Robinson, LP. She has won numerous awards including The Michael Bryan Clarke Memorial Prize and the Jamaica Public Service Ltd. Scholarship.