Concessions are an important tool in the development process; it allows Government to direct the economy along a predetermined path and ensures that everyone is afforded the opportunity to participate. The Nevis Island Administration (NIA) is keen on improving the quantity and quality of information available to the public at large. To this end, policies that have been implemented by the NIA over the years are being made available. The initiative is aimed at achieving transparency in the concessions on duties and taxes, which may be granted by the Administration.
List of Concessions
The core legal basis for the granting of concessions are made up of the following:
- The Fiscal Incentives Act (FIA) 1974
- The Customs Tariff Act, 1984
- The Consumption Tax Act, 1974
- The Hotels Aid Ordinance
Various provisions included in the Income Tax Act
- Mercantile tax qualifying goods (Duty free shops)
- Duty free concessions for returning nationals
- Concessions on vehicle for use by churches
- Concessions under the sporting goods agreement
- Concessions on foodstuff
- Duty free concessions for agricultural purposes
- Travel tax and departure tax exemption
- Duty free concessions to bona fide taxi operators
- Concessions to small businesses
The Fiscal Incentives Act
The Fiscal Incentives Act (FIA) stipulates that the basic criteria for concessions to enterprises are based on what is termed “approved enterprises” and “approved products”. Eligible enterprises are classified in one of three classes depending on the amount of local value added in production, as in “enclave enterprises” produced solely for export. Concessions on import duty may be granted in cases where the goods in question are not available in Member States at comparable prices and qualities or in adequate quantities.
The scope of tax concessions allowed under the FIA is limited to the corporation tax under the Income Tax Act. Generally, if a concession is given for import duties, concession is also given for income tax.
Concessions relating to corporation tax are provided for in the FIA in the form of complete or partial exemptions for income taxes if incorporated businesses for a specified number of years. The duration of the “tax holiday” depends on the classification of the enterprise, the size of the investment and the number of persons to be employed.
In cases where losses are accumulated during the tax holidays, a loss carry-over during the subsequent five years is allowed. Capital expenditure incurred during the tax holiday is treated as having been incurred at the end of the tax holiday and normal capital allowances (but not the initial allowance) are given accordingly.
Concessions relating to import duties are provided for specified imports of approved enterprises, including unincorporated enterprises, on an ad hoc basis, and may include duties on plant, equipment, spare parts and raw materials. Concession is provided in full i.e. for the totality of the duty but does not include the consumption tax and service charge.
The FIA, as drafted, grants concessions for the construction and equipment of new enterprises or the expansion of exiting ones. The procedures are initiated by application from the enterprise and/or importer specifying, the local value added content of production, the expected employment effect and the wages expected to be paid. Upon evaluation by the Ministry of Finance, all relevant parties, including the Ministry of Finance makes the final decision regarding approval or rejection.
According to the FIA, the Authorities (the Ministry of Finance) are required to appraise the impact of the concession after 3 years and then every second year.