It has been more than a year since new laws were passed in St Vincent and the Grenadines that regulate business activities in the country. In particular, the laws have impacted a formerly popular offshore business structure, namely, the IBC (International Business Company). In 2020, registering an IBC in the country is not as attractive as it used to be before because now a 30% tax is due regardless whether the profit has been made in St Vincent or outside of the country.
However, things are not so bad as they may look at first glance. Even though St Vincent-registered IBCs are of no interest to foreign entrepreneurs any longer, Limited Liability Companies (LLCs) still are. Let us clarify why registering an offshore IBC in St Vincent makes no economic sense and what alternatives are available in the country.
What has changed in St Vincent and the Grenadines in 2020?
With the new legislation, registering an IBC in St Vincent has become impossible. The company form name has been changed to Business Company (BC), which is in keeping with the requirements put forward by the OECD and EU financial authorities striving for de-offshorization. Similar situations are found in other Caribbean states.
After amendments to the local law ‘On Companies’ went into effect on December 27, 2018, registering an offshore company in St Vincent became meaningless and business owners started looking for more attractive jurisdictions to continue their international business activities.
New rules of business incorporation in St Vincent and the Grenadines
Here are the main effects of the changes in the business-related legislation that occurred in St Vincent recently:
- Before 2019, it was possible to establish an IBC (International Business Company) in the country but now you can establish only a BC (Business Company).
- Now both residents and nonresidents of St Vincent can register a BC in the country. This change is conditioned by the fact that the territorial taxation system has ceased to be applied in St Vincent and the international taxation system is applied instead. This means that all incomes whether they are obtained from within the country or from abroad, are subject to a 30% tax.
- From 2019, information about a St Vincent-registered BC owners and shareholders has to be made publicly available. The names and the addresses of company beneficiaries must be disclosed to the St Vincent Financial Services Authority (FSA).
- Business companies shall submit annual financial reports (financial statements) if their net income equals or exceeds US$ 4 million or if the worth of the company assets equals or exceeds US$ 2 million. Smaller corporations shall submit solvency declarations.
- Regardless of the amount of income, any St Vincent-registered BC shall keep financial accounts and maintain the reports available to fiscal authorities for seven years.
- The minutes of the BC shareholder/ Board of Directors meetings shall be kept for ten years.
Important: as the current legislation in St Vincent and the Grenadines does not provide for favorable business conditions, many international business people choose to re-domicile to other jurisdictions such as Gibraltar, for example. If you would like to re-domicile your St Vincent-registered company to another country, we will gladly help you do so.
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An LLC in St Vincent and the Grenadines as an alternative to IBC
If you are positive that your offshore company needs to be registered in St Vincent and the Grenadines and no other place, there is still a chance to avoid paying local taxes on your international business operations. Registering an LLC (Limited Liability Company) will bring many advantages for incorporating a foreign business company.
Advantages of registering an LLC in St Vincent and the Grenadines
What are the main benefits of registering an LLC in this Caribbean country? Here they are:
- Minimal corporate requirements:
- a. No requirement to the charter capital – it can be as low as one US dollar;
- b. Any currency can be used for the charter capital;
- c. One director and one shareholder will be enough to register an LLC in St Vincent (both can be private individuals or legal entities of any residency);
- d. No requirements to have company Secretary.
- If the LLC does business and obtains profits abroad, it is not subject to any taxes in St Vincent where it is domiciled.
- Company directors and shareholders’ personal data do not have to be made publicly available; shareholder meetings can be held anywhere in the world.
- No annual reporting is required.
In addition to registering an offshore LLC in St Vincent and the Grenadines, you may be interested in using the offshore banking services that are available in this jurisdiction. Offshore banks can be used to service non-resident companies thus protecting and diversifying their assets.
Moreover, a foreign national is entitled to open his or her own offshore bank account in St Vincent. A banking license is required for this purpose and the application processing takes at least three month but the opportunity exists anyway.
For your information: our experts can help you register a company in Nevis with a corporate account in B2B Bank LTD in St Vincent and the Grenadines. Please make a query about this opportunity.
Taxes in St Vincent and the Grenadines
In 2020, the corporate tax in the country is uniform and it constitutes 30%. The only exception is a St Vincent-registered LLC that can confirm tax residency in another country.
The authorities of St Vincent and the Grenadines are considering the possibility to reintroduce the territorial taxation system and if this happens, all the recent changes to the business-related legislation will become irrelevant for international entrepreneurs. As things stand for now, however, the country appears less attractive than such jurisdictions as Malta, Gibraltar, Germany, or Panama.
Registering an LLC in St Vincent and the Grenadines: some concluding remarks
The recent amendments have not been able to completely turn the international business community off St Vincent. At least one attractive option is still available but it has to be admitted that there are other offshore jurisdictions that offer a wider choice of opportunities.
If you are in doubt about what country to choose where you can register a foreign company, if you are looking for a low-tax jurisdiction, if you would like to open a foreign bank account or buy a second passport, you are welcome to apply for our assistance in these matters. InternationalWealth experts are there to help you! Please contact us by email, WhatsApp, or use the live chat and ask for a consultation. We are looking forward to hearing from you!
How can a non-resident register an LLC in St Vincent and the Grenadines?
If you would like to establish an LLC in St Vincent, you have to apply for the assistance of a local registration agent. You will also have to rent an office to serve as your company legal address, pay the state duties, and submit all the required documents. There are no requirements as to the LLC charter capital.
How can I re-domicile my offshore company from St Vincent to another jurisdiction?
Re-domiciliation is a rather long and complicated process so you will be well advised to use the services of professionals such as ourselves. Both a BC and an LLC can be re-domiciled from St Vincent to another country.
What is the corporate income tax in St Vincent and the Grenadines in 2020?
All companies have to pay 30% of their income in taxes if the income equals or exceeds US$ 4,000,000 or if the total worth of the company assets equals or exceeds US$ 2,000,000. The former tax incentives for IBCs are not in effect anymore.