Update on Tax Treatment of Nevis Corporations & Limited Liability Companies - March 2020
Morning Star Holdings Limited (a wholly owned sub-brand of the Trident Trust Group) has received a communication from the Ministry of Finance of the Nevis Island Administration ('Ministry of Finance') confirming the continued commitment of the Administration to the Nevis International Financial Sector. The Ministry of Finance also confirmed the Administration is working with the Federal Government in St. Kitts to resolve the undefined tax status of NBCOs and NLLCOs. This will be by way of an amendment to the Income Tax Act.
The amendment to the Income Tax Act is expected to provide a clear definition of tax residency based on the concepts of 'central management and control' and 'Permanent Establishment' in line with the OECD definitions. The Administration anticipates the amendment to the Income Tax Act to be in place by September 2020.
Until the amendment is complete, the Nevis Island Administration has confirmed that for NBCOs and NLLCOs:
- Entities which have neither central management and control in Nevis, nor a Permanent Establishment in Nevis will not be subject to taxes in the Federation of St. Kitts & Nevis.
- Entities which are deemed to have a Permanent Establishment (but not central management and control) in Nevis will be liable to pay Corporation Income Tax on income generated within or remitted to the Federation.
- Entities which are deemed to have central management and control in Nevis will be liable to pay Corporation Income Tax on their worldwide income.
- All entities will need to file a Simplified Tax Return by 15 April of each year.
- The filing of the Simplified Tax Return due by 15 April 2020 and payment of associated taxes has been deferred for all entities to allow the completion of the amendment of the Income Tax Act and development of the Simplified Tax Return.
We will inform you as quickly as possible once the amendment to the Income Tax Act and the Simplified Tax Return are available and when the Nevis Island Administration provides further updates.
Feel free to contact our Nevis office with any questions on this update.