St. Kitts and Nevis Country Profile
2011
Table of Contents
1. GENERAL INFORMATION
2. SOCIAL INDICATORS
3. REACHING CONSUMERS
4. ECONOMIC OUTLOOK
5. TRADE OVERVIEW
6. MARKET ACCESS
7. BILATERAL RELATIONSHIP
8. BUSINESS ENVIRONMENT
This profile contains the following information:
General Information as it pertains to the: geography, climate, national and environmental hazards, natural resources, language, demographics and government and politics of St. Kitts and Nevis:
• Social Indicators of the level of human development including statistics on health, education, inequality, gender inequality, environmental sustainability and overall human development ranking; • Reaching Consumers reveals the Infrastructure for Trade Facilitation which contains information on ports and terminals, airports, telecommunications, media and roads; • An Economic Outlook which comprises an economic overview of the economy and lists a number of economic indicators such as statistics on: the Gross Domestic Product (GDP), the labour force, unemployment, poverty and inflation rates; • Trade Overview provides a visual display of the major imports/ exports and provides the St. Kitts and Nevis trade balance with Barbados and with CARICOM; • Bilateral Relations- shows data on trade flows between Barbados and St. Lucia and provides a brief synopsis on tourism. • Market Access includes an overview of: - -Trade Agreements Entered into Force - this category lists multilateral agreements, customs unions, free trade agreements and partial preferential agreements of which St. Kitts and Nevis is a party; -Bilateral Investment Treaties - includes partners, date of signature and date of entry into force if applicable; Trade Policy and Measure Affecting Trade - consists of measures which have negative or positive impacts on exports and imports;
Business Environment- information on the steps to starting a business, the grant of construction permits, applicable taxes, procedures and documentation needed to facilitate trade across borders; • Useful contacts.
1. GENERAL INFORMATION
Geography
The Federation of Saint Kitts and Nevis is composed of two volcanic, mountainous islands located in the Caribbean Sea, about one-third of the way from Puerto Rico to Trinidad and Tobago. The islands of Saint Kitts and Nevis form the shapes of a baseball bat and ball, respectively. The islands have a combined area of 261 square km (101 sq miles), with Saint Kitts nearly twice as large as Nevis. The two islands are separated by a 3 km (1.9 miles) -wide channel called 'The Narrows." The country has a total coastline of 135 km (84 miles). Both islands are of volcanic origin and have a mountainous terrain, reaching a maximum elevation of 1,160 m (3,800 ft).1
Main Cities Basseterre is the nation's capital. It is located on the southwestern coast of Saint Kitts Island and has a population of about 15,000.
Climate Saint Kitts and Nevis has a tropical climate, but because of the prevailing northern winds, the country is among the coolest and least humid of the Caribbean nations. 2 Temperatures average approximately 27 °C (81 °F), with little seasonal or temperature variation. The rainy season lasts from May to November. Mountainous regions average 2.5-4 m (8-13 ft) of annual rainfall, much more than the average 1 m (3 ft) of rain along the coasts. The country is vulnerable to damage from tropical storms. Hurricane Hugo in 1989 caused US
1 CIA. The World Factbook. Saint Kitts and Nevis. Retrieved on: 24 June 2009. 2 The Guardian. Country Profile: Saint Kitts and Nevis.
$43 million in damages; hurricane Luis and Marilyn in 1995 caused over $55 million, and hurricane Georges in 1998 caused $74 million. 3
Natural and Environmental Hazards
Grenada lies on the edge of a hurricane belt; hurricane season lasts from June to November 4
Natural Resources
Timber, tropical fruit, deepwater harbours.
Demographics
St. Kitts and Nevis has a population of 108,419 (July 2011 est.) 5. More than 90% of the inhabitants are of African descent, with the remainder comprised mostly of British, Portuguese and Lebanese ancestry.7
3 St. Kitts and Nevis. Initial National Communication 4 CIA World Factbook 5 CIA World Factbook
Distribution of Population According to Age (2011 est) Age Group Group’s % of Male Female Population 0-14 25.4 14,152 13,390 15-64 65.7 36, 245 34,960 65 years and 8.9 4,372 5,300 over Source: www.indexmundi.com
Religion Roman Catholic 53%, Anglican 13.8%, other Protestant 33.2% 6
Language
English (official), French patois 7
Time Zone
GMT- 4
6 CIA World Factbook 7 CIA World Factbook
Government & Politics
St. Kitts and Nevis is a federal state that adheres to the forms of the British Westminster- style parliamentary system of government. The uniqueness of its 1983 Constitution derives from the provisions for the autonomy of the island of Nevis with regard to certain "specified matters" and the establishment of the separate Nevis Island Assembly (legislature) to address these local concerns.
As a constitutional monarchy within the Commonwealth of Nations (see Appendix B), St. Kitts and Nevis recognizes Queen Elizabeth II or her successor as the titular head of government. The British monarch is represented by a governor general, who resides in Basseterre. Although legally responsible for the government of both islands, the governor general appoints a deputy to represent him or her on Nevis. As the highest executive authority on the islands, the governor general appoints the prime minister, the deputy prime minister, other ministers of the government, the leader of the opposition in Parliament, and members of the Public Service Commission and Police Service Commission. He may prorogue or dissolve Parliament at any time. In the judicial sphere, he has the power of pardon, "respite" (stay of execution of sentence), and remittance of all or part of the sentence of convicted criminals. As in most Commonwealth countries, however, the apparently sweeping nature of the governor general's powers is restricted by the requirement that the governor general act only in accordance with the advice of the prime minister. In St. Kitts and Nevis, the governor general is permitted to act without consultation only when the prime minister cannot be contacted because of absence or illness. 8
8 http://countrystudies.us/caribbean-islands/106.htm
2. SOCIAL INDICATORS
The Country Poverty Assessment conducted in 2007 revealed a national poverty rate of 21.8 of individuals across St. Kitts and Nevis, with the situation being worse in St. Kitts than in Nevis. This is a marked reduction from levels above 30 % seen in 2000. The reduction is attributed to: putting poverty reduction at the centre of the policy framework, a greater sensitivity to targeting the poor, expansion of employment and the improvement of poorer households’ resource base by remittances.9
Health index 0.838 Indicators Life Expectancy at birth (years) 73.1 Expenditure on health, public (% of GDP) 3.4 Under-five morality (per 1,000 live births) 15
Education
Indicators Public expenditure on education (% GDP) 9.6
Expected years of schooling of children (under 12.9 7 in years)
Mean years of schooling of adults (years) 8.4
Adult literacy rate, both sexes (% aged 15 and n.a above)
9 Country Povery Assessment. Submitted by Kairi consultants Ltd to the Caribbean Development Bank, 2008. Found at: http://www.caribank.org/titanweb/cdb/webcms.nsf/75f7ba2c7557c2e50425745900719b7a!OpenV iew
Combined gross enrolment ratio in education 75.6 (both sexes) % Inequality Indicators Inequality-adjusted education index n.a.
Inequality-adjusted income index n.a. Gender inequality index value n.a. Indicators Population with at least secondary education, n.a. female/male ratio
Adolescent fertility rate (births per 1,000 42.6 women aged 15-19 years)
Sustainability Indicators Endangered species (% of all species) 8
Ecological footprint of consumption (global n.a. hectares per capita)
Greenhouse gases per capita n.a.
Natural resource depletion (% of GNI) <0.1
Carbon dioxide per capita emissions (growth n.a. 1970-2008) (%)
Forest area (thousand ha) 11
Change in forest area (%) 0.0
Impact of natural disasters: number of deaths n.a. (average per year per million)
Impact of natural disasters: population n.a. affected (average per year per million)
Environmental Performance Index n.a.
Forest area (% of total land area) 42.3
Carbon Dioxide Emissions per capita (tonnes) 4.9 Human Development Index Rank 72 Source: undp.org
3. REACHING CONSUMERS : TRANSPORTATION AND COMMUNICATION
Transportation
By Air
St. Kitts and Nevis has two government owned airports, the Robert L. Bradshaw International Airport in St. Kitts and the Vance W. Amory International Airport in Nevis.
Overall responsibility for air transport in St. Kitts and Nevis rests with the Minister of Public Works, Utilities, Transport and Postal Services. The Air Transport Licensing Board deals with applications for air transport licences, and sets landing charges. At the regional level, regulatory oversight for safety and security issues is provided by the Eastern Caribbean Civil Aviation Authority (ECCAA). Responsibility for the airports rests with the St. Christopher Air and Sea Ports Authority and the Nevis Air and Sea Ports Authority.
St. Kitts and Nevis carries a travel tax, a departure tax and a cruise passenger tax. St. Kitts and Nevis is a contracting state of the ICAO. It has one bilateral air services agreement, recorded by ICAO, with Canada. 10
10 Canadian Transportation Agency Online information. Viewed at: http://www.cta-otc.gc.ca/air- aerien/agreements/html/stkitts_e.html.
By Sea
St. Kitts and Nevis has undertaken GATS commitments on "ship registration for the control, regulation and orderly development of merchant shipping" subject to certain registration requirements. 11
The Ministry of Public Works, Utilities, Transport and Posts is responsible for maritime transport formulation and management.
Persons qualified to own St. Kitts and Nevis ships include:
o St. Kitts and Nevis citizens
o CARICOM citizens resident in a CARICOM member state as long as the ship is engaged in international voyages
o individuals or corporations in joint-venture shipping enterprise relations with St. Kitts and Nevis citizens
o corporations established and with a registered office in St. Kitts and Nevis
o and any other persons determined by the Minister.
Non-eligible persons may register a ship under the St. Kitts and Nevis flag if:
o over 51% of the shares of the ship are owned by persons qualified to own a St. Kitts and Nevis ship
o and a maritime agent resident in St. Kitts and Nevis is appointed. 12
11 WTO document GATS/SC/119, 16 November 1995.
Therefore, foreign individuals or corporations wishing to register a ship under the St. Kitts and Nevis flag must establish a local company. Various taxes and fees, including registration fees, administration fees for registration, and annual fees and taxes, are levied by the Government; these often vary according to the gross tonnage of the ship. Ships wholly owned by a St. Kitts and Nevis company with its registered office in the Federation, or a St. Kitts and Nevis national or citizen resident in the Federation are entitled to a 50% reduction of registration fees. These fees range from US$160 for ships of 500 GT or less to US$1,200 for ships of 20,000 GT or more. Locally flagged vessels may benefit from duty concessions for imports of spare parts, fuel, and other items.
Transportation Statistics
Airports 2 (2010)
Airports with paved runways 2 (2010)
Airports with unpaved runways -
Pipeline (oil) -
Railways 50km
Roadways 383km
12 Merchant Shipping Act (2002), Part II (Art. 3-8). Viewed at: http://www.st.kittsnevisregistry. net.
PORTS AND TERMINALS
The main ports in St. Kitts are Basseterre and Port Zante. These are owned and administered by the state-owned St. Christopher Air and Sea Ports Authority. The main port in Nevis is Charlestown, which is owned and administered by the Nevis Air and Sea Ports Authority. Each authority has a monopoly in the provision of port services, and approval from the relevant Authority is required to discharge and load general cargo. According to the authorities, an average of 22 containers is unloaded in an hour at the main commercial ports.
Country Airports Sea ports
St. Kitts Robert Llewelyn Bradshaw Int’l Port Zante Airport Basseterre Cargo Port
Nevis Vance Amory Airport Long Point Port Charlestown Port New Castle Port (Domestic)
Telecommunications
The Prime Minister is the Minister for Telecommunications, and is assisted by the Minister of State in the Ministry of Finance, Sustainable Development and Information Technology. The National Telecommunications Regulatory Commission of St. Kitts and Nevis (NTRC) is responsible for regulation of the sector. At the regional level, the Eastern Caribbean
Telecommunications Authority (ECTEL) plays an important advisory and policy-coordinating role. 13
Cable & Wireless (St. Kitts-Nevis) Ltd is a joint venture between Cable & Wireless and the St. Kitts-Nevis Government, providing all domestic and international telecommunications services to the islands, with digitalization using fiber optic cables. Services offered include Direct Dialing, Leased Circuits, Internet, CLASS Services and Voice Mail. ISDN is available on request. Cable and Wireless Caribbean Cellular (St. Kitts) Ltd. provides cellular phone service.
Inter island links to Antigua and Barbuda and Saint Martin (Guadeloupe and Netherlands Antilles) are handled by VHF/UHF/SHF radiotelephone international: international calls are carried by radiotelephone to Antigua and Barbuda and switched there to submarine cable or to Intelsat; or carried to Saint Martin (Guadeloupe and Netherlands Antilles) by radiotelephone and switched to Intelsat. 14
13 WTO document. St. Kitts and Nevis TPRO 2007 14 http://www.lowtax.net/lowtax/html/stkitts_nevis/jnvcfir.html#economy
The press Television Radio Sun St Kitts/Nevis ZIZ Television - commercial, ZIZ Radio - commercial, government-owned government-owned
The St Kitts and Big Wave 96.7 - commercial, Nevis Observer operated by ZIZ SKN List Winn FM - commercial, private The Democrat Choice FM- 105 FM
The Labour Kyss FM 102.5 Spokesman
St. Kitts and Nevis : Telecommunications Statistics Telephone System: Automatic; island-wide
Telephone Fixed Lines: 20,600 (2009)
Mobile Phones: 84,600 (2009)
Country code 1 (869)
Radio Broadcast stations AM- 3; FM-8 (2008)
Television Broadcast stations 1 (plus 3 repeaters) (2008)
Internet Code .kn
Internet Hosts 51 (2010)
Internet Users 17,000 (2009)
Mobile Subscribers 84,600 (2010)
Personal Computers 11,000 (2004)
Telephone Lines 20,600 (2010)
4. ECONOMIC OUTLOOK
In June 2009, the IMF stated that the economy of St. Kitts and Nevis had weakened after several years of growth. Still, the IMF believes that the economy is well placed to achieve strong growth over the medium term provided that appropriate policies and reforms are implemented. The IMF said that after growing by 3.2% in 2008, St. Kitts and Nevis’s real output was projected to contract by 1.2% in 2009. In the event, GDP slumped to -9.6%. Higher food and fuel prices led to a pick-up in inflation in the first ten months of 2008, peaking in October 2008 at 8.3% before moderating to 7.6% at the end of 2008. Inflation eased further in 2009 on the back of lower oil prices, a rise to 2.5% was recorded for 2010 and 2011 is estimated to see inflation rise to 3.5%.
GDP per capita at purchasing power parity is USD13,700 (2010 est), on the low side for the region. Agriculture represents just 2.6% of the economy, with industry contributing 25.3% and services 72.1%. Tourism revenues are now the chief source of the islands' foreign exchange. Each islands boasts a championship golf course and additional tourist facilities, including a second cruise ship pier, hotels are under construction.
The current account deficit widened to 9.4% compared to 3.8% in 2009 due to a reduction in tourism and FDI-related construction. Oil imports from Venezuela contributed to arrears faced by the jurisdiction. With a debt ratio of almost 200% of GDP by end-2010, the government announced in June, 2011 that it plans to restructure its debt with the help of its creditors 15 .
15 http://www.qfinance.com/country-profiles/st-kitts-and-nevis
Currency
St. Kitts and Nevis utilises the East Caribbean dollar (sign: $; code: XCD ). It is the currency of eight of the nine members of the Organisation of Eastern Caribbean States . It has existed since 1975, being the successor to the British West Indies dollar, and it is normally abbreviated with the dollar sign $ or, alternatively, EC$ to distinguish it from other dollar-denominated currencies. The EC$ is subdivided into 100 cents.
1 BBD= 1.31896 XCD
1 USD= 2.68820 XCD
1 Euro = 3.50404 XCD 16
Table Showing GDP and Economic Information
Central bank N/A
International Reserves US$ 168.859 million (Source: World Bank; Data updated: November 2009)
Gross Domestic Product - US$ 557 million (2008 estimate) GDP GDP per capita - PPP US $13,700 (2010 Source: IMF)
GDP (Purchasing Power 703 million of International dollars (2008 estimate) Parity) GDP - composition by sector agriculture: 2.6% industry: 25.3% services: 72.1% (2010 estimate Source: IMF)
16 Retrieved from www.oanda.com Dec 29 2011
Basic Economic Indicators 2006 2007 2008 2009 2010 2011 Real GDP growth 2.6% 4.2% 4.6% -9.6% -1.5% 1.5%*
Unemployment rate ------
Inflation NA NA 5.4% -1.9% 2.5% 3.5%*
Public debt NA 181.3% 170% 195.6% 200.4% 191.9%* (General government gross debt as a % of GDP)
Public deficit (General NA -4.8% -5% -3.1% -15.5%* -13.1%** government net lending/ borrowing as a % of GDP)
Government Bond Ratings Standard & Poor's: NA Moody's rating: NA Moody's outlook: NA
(*Estimate **Forecast) Source Global Finance http://www.gfmag.com
5. TRADE OVERVIEW
Merchandise Trade Performance
Services Trade Performance
Source: Intracen
List of markets engaged in trade with St. Kitts and Nevis
Exported value Exported value Imported value Imported Importers in 2007 in 2007 (XCD Exporters in 2007 value in 2007 (US Dollars) $) (US Dollars) (XCD $) United States of United States of 29,530 79,382.5 159,780 429,521 America America Trinidad and United Kingdom 779 2,094.11 29,284 78,721.2 Tobago Antigua and Barbuda 605 1,626.36 Japan 10,118 27,199.2 Netherlnad Antilles 542 1,457.00 United Kingdom 9,673 26,003.0
Dominica 1,118.29 Canada 8,215 22,083.6 416 France 354 951.623 Germany 4,681 12,583.5 St. Vincent and the Dominican 317 852.159 4,553 12,239.4 Grenadines Republic
St. Lucia 274 736.567 Barbados 4,380 11,774.3
Barbados 187 502.693 Denmark 4,204 11,301.2
Japan 180 483.876 China 6,683 17,965.2
St.St.St. Kitts & NevisNevis’’’’ Top 10 Merchandise Exports to the World 2010 Exported Exported value Product label value in 2010 in 2010 (US$) (XCD$) Electrical, electronic 58,206 156,469.00 equipment Commodities not elsewhere 8,943 24,040.60 specified Aircraft, spacecraft, and parts 2,985 8,024.28 thereof Ships, boats and other floating 2,688 7,225.88 structures
Beverages, spirits and vinegar 1,776 4,774.24
Machinery, nuclear reactors, 2,712.39 1,009 boilers, etc Optical, photo, technical, 331 889.794 medical, etc apparatus Miscellaneous manufactured 282 758.072 articles Furniture, lighting, signs, 222 596.78 prefabricated buildings
Live animals 183 491.94
Source: ITC calculations based on COMTRADE statistics.
Top 10 Merchandise Imports by St. Kitts & Nevis fromfromfrom World in 2010
Imported Imported value value in 2010 in 2010 Description (US Dollars (XCD Dollars 1000) 1000) Ships, boats and other floating structures 37,330 100350.5 Electrical, electronic equipment 35,608 95721.43 Pearls, precious stones, metals, coins, etc 18,465 49637.61 Machinery, nuclear reactors, boilers, etc 17,875 48051.58 Commodities not elsewh ere specified 17,377 46712.85 Vehicles other than railway, tramway 13,506 36306.83 Headgear and parts thereof 10,470 28145.45 Furniture, lighting, signs, prefabricated buildings 10,295 27675.02 Wood and articles of wood, wood charcoal 9,691 26051.35 Mineral fuels, oils, distillation products, etc 7,231 19438.37 Op cit
Bilateral trade between St. Kitts & Nevis and Caribbean Community (CARICOM)
St. Lucia's imports from Caribbean Community (CARICOM) Product label Value in Value in Value in Value in Value in 2003 2004 2005 2006 2007 Beverages, spirits and vinegar 190 504 655 1,603 1,529
Plastics and articles thereof 14 13 11 37 296
Aluminium and articles thereof 0 1 0 0 61
Electrical, electronic equipment 3 134 0 55 46
Articles of iron or steel 5 19 8 101 42
Furniture, lighting, signs, prefabricated 5 62 13 8 29 buildings
Articles of apparel, accessories, not knit or 28 23 9 9 24 crochet
Fish, crustaceans, molluscs, aquatic 0 19 0 6 23 invertebrates nes
Wood and articles of wood, wood charcoal 0 0 7 0 23
Iron and steel 0 1 0 0 14
Bilateral trade between St. Kitts & Nevis and Caribbean Community (CARICOM)
Barbados's exports to Caribbean Community (CARICOM) Product label Value in Value in Value in Value in Value in 2006 2007 2008 2009 2010 Mineral fuels, oils, distillation products, etc 17,342 16,112 17,279 18,710 17,123
Salt, sulphur, earth, stone, plaster, lime and cement 2,590 2,904 3,166 2,721 2,741
Beverages, spirits and vinegar 1,955 1,399 1,755 2,277 2,360
Iron and steel 1,480 2,063 1,440 2,167 2,253
Paper & paperboard, articles of pulp, paper and board 1,303 1,292 1,366 1,976 1,854
Plastics and articles thereof 1,053 850 970 1,476 1,476
Tanning, dyeing extracts, tannins, derivs,pigments etc 1,076 857 906 1,245 1,391
Machinery, nuclear reactors, boilers, etc 197 364 950 324 1,338
Furniture, lighting, signs, prefabricated buildings 1,057 928 1,285 892 1,315
Milling products, malt, starches, inulin, wheat gluten 1,061 1,057 883 1,141 1,235
6.6.6. BARBDOS – St. KITTS & NEVIS BILATERAL RELATIONSHIP
St. Kitts and Nevis imports from Barbados in 20120100 (USD 1000) Barbados's exports to St. Kitts and Nevis Product label Value in Value in Value in Value in Value in 2006 2007 2008 2009 2010
Pharmaceutical products 999 1,143 1,580 1,420 1,294 Furniture, lighting, signs, 811 259 1,384 494 1,203 prefabricated buildings Tanning, dyeing extracts, 586 610 532 426 591 tannins, derivs, pigments etc Mineral fuels, oils, 16 110 112 32 449 distillation products, etc Miscellaneous chemical 350 240 39 131 353 products Animal,vegetable fats and 387 441 536 342 318 oils, cleavage products, etc Plastics and articles thereof 601 333 383 168 249 Iron and steel 30 104 489 93 214 Paper & paperboard, articles 217 164 103 169 203 of pulp, paper and board Aluminium and articles 374 352 202 119 157 thereof
St. Kitts and Nevis exports to Barbados in 2010 (USD 1000) Barbados's imports from Grenada Product label Value in Value Value in Value in Value in 2006 in 2007 2008 2009 2010 Beverages, spirits and vinegar 92 263 274 366 186 Other made textile articles, sets, worn 18 0 0 0 8 clothing etc Printed books, newspapers, pictures 2 7 3 6 7 etc Toys, games, sports requisites 0 0 0 0 6 Commodities not elsewhere specified 7 0 3 13 5 Optical, photo, technical, medical, etc 0 0 0 0 3 apparatus Machinery, nuclear reactors, boilers, 6 2 4 1 1 etc Electrical, electronic equipment 0 5 2 1 1 Soaps, lubricants, waxes, candles, 0 0 1 1 1 modelling pastes Works of art, collectors pieces and 1 0 0 0 15 antiques
Source: ITC calculations based on COMTRADE statistics
Tourism
The Minister of Tourism has overall responsibility for the formulation of tourism policy and implementation in St. Kitts and Nevis; marketing and promotion activities are carried out by the St. Kitts Tourism Authority and the Nevis Tourism Authority 17 , as well as the private sector St. Kitts Hotel and Tourism Association and the Nevis Hotel and Tourism Association.
St. Kitts and Nevis levies a number of tourism-related taxes and charges. These include a US$22 departure tax for passengers departing both by air and by sea; a US$1.50 cruise passenger tax and a 9% hotel room tax (which includes a 2% island enhancement tax). 18 A travel tax is levied on tickets for air and maritime travel originating in St. Kitts and Nevis at a rate of 10% of the cost of the fare. 19
17 Nevis Tourism Authority online information. Viewed at: http://www.nevisisland.com. 18 The legislative basis of the hotel room tax is The Hotel Accommodation and Restaurant (Amendment) Act No. 16, 1999. 19 WTO document. St. Kitts and Nevis TPR 2007.
Arrivals in Barbados from St. Kitts and Nevis 2008- 2011 Month Total Arrivals 2008 2009 2010 2011 Jan 217 234 202 217 Feb 224 218 260 216 Mar 310 341 409 204 Apr 317 343 332 277 May 321 359 420 267 Jun 285 398 362 328 Jul 411 471 326 367 Aug 294 442 326 367 Sep 292 340 267 230 Oct 332 275 276 214 Nov 317 256 241 199 Dec 212 251 169 0 Total (yr) 3532 3928 3590 2886 AB Change - 396 -338 -704 % Change - 10.08 -9.42 -24.39 Source: Barbados Tourism Authority
7. MARKET ACCESS
Trade and Investment
Trade
The Ministry of Foreign Affairs, International Trade, Industry Commerce and Consumer Affairs is responsible for all WTO and international and regional trade issues; it is also the main agency for coordinating trade policy discussions and formulation, and is responsible for matters related to anti-dumping, subsidies, and competition policy. The Ministry of Finance, Sustainable Development, Information Technology, Tourism, Culture and Sport, through the Customs and Excise Department, is directly responsible for tariffs and customs valuation. It is also responsible, together with the Ministry of Foreign Affairs, International Trade, Industry, Commerce and Consumer Affairs, for formulating of policy relating to services and to foreign direct investment. Other agencies involved in trade include the Ministry of Housing, Agriculture, Fisheries, and the Office of the Attorney General, and the St. Kitts and Nevis Bureau of Standards.
Trade policy is coordinated at the national level with the private sector. The views of the private sector are generally expressed through the local Chamber of Industry and Commerce and through specially organized consultations for these purposes. In addition, the views of labour unions are taken into account.
Over the years, the objective of the trade and investment policy has been to enhance competitiveness and attract foreign direct investment, particularly in tourism and manufacturing, financial services, informatics and other services, and to promote some degree of economic diversification particularly following the closure of the sugar industry. St. Kitts and Nevis has traditionally regarded international trade and special and differential treatment in its trading arrangements as playing a vital role in its economic development, and the authorities have noted that participation in the multilateral system presents opportunities for fuller integration into the global economy.
St. Kitts and Nevis regards participation in the WTO as critically important, in light of concerns about preference erosion and the impact of changing preferences on its sugar industry. The country regards engagement with the multilateral system as important, particularly in the context of the Doha Development Agenda. However, due to relatively small human and technical resources in the area of trade policy, St. Kitts and Nevis attempts to coordinate its trade through agreements with regional partners, as part of the OECS, as well as through CARICOM. Policy harmonization with other OECS and CARICOM Member States also takes place in other areas, including investment, international relations, tourism, and monetary policy. 20
Investment
Foreign investors may hold up to 100% of an investment. Foreign investors receive national treatment except with regard to the requirement to obtain an Alien Landholders Licence. This is mandatory for foreign investors seeking to purchase property for residential or commercial purposes. The cost of these licences is 10% of the value of the land or of the interest in the real estate to be purchased. Licences are granted once properly submitted to Cabinet for consideration and payment of the licence fees. Foreign investors do not require a landholding licence for the purchase of land in certain parts of the island, such as Frigate Bay or the South East Peninsula.
Foreign investment is the responsibility of the Ministry of Foreign Affairs, International Trade, Industry, Commerce and Consumer Affairs, along with the Ministry of Finance and the Ministry of Sustainable Development
20 WTO document. St. Kitts and Nevis TPR 2007.
In order to attract foreign investment, the Government offers a range of incentives to potential investors, particularly in the areas of tourism and hotel accommodation, and manufacturing. Remittances to persons or entities abroad are subject to a 10% withholding tax. Additionally, where a company is not exempt, there is a 20% capital gains tax on profits unless an exemption is granted from the disposal of assets located in St. Kitts within a year of their acquisition.
St. Kitts And Nevis has not signed any bilateral investment agreements with any countries. It has double taxation agreements with Denmark, Norway, Sweden, the United Kingdom, and the United States. 21
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21 WTO document. St. Kitts and Nevis TPR 2007
Trade Agreements
St. Kitts and Nevis Multilateral Agreeme nts
Agreement/ Partner(s) Date of Signature World Trade Organization 21 February 1996 Customs Union CARICOM members 4 July 1973 (Revised 5 Jul 2001) Economic Association Agreements CARIFORUM - European Community 15 October 2008 Partial Preferential A greements CARICOM -Colombia 24 July 1994 CARICOM -Venezuela 13 October 1992 Source: Trade Agreements Signed but not in Force SICE, CARICOM -Costa Rica 9 March 2004 Foreign CARICOM -Dominican Republic 22 August 1998 Trade Informa Bilateral Investment Treaties tion - - System
Trade Policy Measures
° Measures affecting Exports
I. Documentation/ Procedures
Export documents • Bill of Lading • Certificate of origin • Commercial invoice • Customs Export Declaration • Packing list • Terminal Handling Receipts
Indicators Belize Documents to Export (number) 5
Time to Export (days) 11 Cost to export ($US per container) 850
Nature of Export Procedures Duration Cost (days) US$ Documents preparation 4 200 Customs clearance and technical 1 100 control Ports and Terminal Handling 5 100 Inland transportation and 1 450 handling Totals 11 850 Source: The World Bank from www.doingbusiness.org
II. Restrictions
Export restrictions and licensing are governed by the External Trade Order No. 32 of 1958. These restrictions are generally for safety and health purposes. Export licences are administered by the Supply Office of the Ministry of Foreign Affairs, International Trade, Industry, Commerce and Consumer Affairs. The exportation of wild birds is forbidden in accordance with the CITES. Exports of narcotic drugs and psychotropic substances, as well as goods bearing the coat of arms or flag of St. Kitts and Nevis are restricted.
III. Incentives
Under the Fiscal Incentives Act, four types of enterprise qualify for tax holidays. The length of the tax holiday for the first three depends on the amount of value added in St. Kitts & Nevis. The fourth type, known as enclave industry, must produce goods exclusively for export outside the CARICOM region.
Group Description Entitlement 1 add 50% or more in value in St Kitts tax holidays of up to 15 years. and Nevis 2 add 25% to 50% in value in St Kitts maximum tax holiday of 12 years
3 add 15% to 25% in value in the maximum tax holiday of 10 years. jurisdiction Enclave Goods produced exclusively for export maximum tax holiday of 15 years outside CARICOM region
NB: St. Kitts and Nevis provides companies with a further tax concession effective at the end of the tax holiday period, which, in effect, is a rebate of a portion of the income tax paid based on export profits as a percentage of total profits. The income tax rebate is: 25% when export profits are between 10% and 20% of total profits; 35% between 21% and 40%; 45% between 41% and 60%; and 50% when export profits exceed 60% of total profits. 22
The Hotel Aids Ordinance provides duty-free concessions (relief from customs duties and pier dues) on items for use in the construction, extension and equipping of a hotel of not less than 30 bedrooms. The Income Tax Ordinance provides special tax relief benefits for hotel proprietors granted licenses under the Hotel Aids Ordinance: the gains or profits of a hotel of more than 30 bedrooms are exempt from income tax for a period of 10 years, for hotels with less than 30 bedrooms, the gains and profits are exempt from income tax for a period of 5 years.
Companies which qualify for tax holidays are allowed to import into St. Kitts and Nevis duty-free all equipment, machinery, spare parts and raw materials used in production.23
IV. Government Procurement
Public finance figures indicate that public sector current expenditure on goods and services totalled EC$115.1 million, in 2005 some 9.7% of GDP, while capital expenditure totalled EC$75.6 million or some 6.4% of GDP. In the context of this Review, officials indicated that the higher level of government procurement vis a
22 WTO document. St. Kitts and Nevis TPR 2006.. 23 http://www.lowtax.net/lowtax/html/stkitts_nevis/jnvcfir.html#economy
vis other OECS countries may be accounted for by the greater extent of free education that is provided in St. Kitts and Nevis.
Tendering for small local public works projects may be done at a local and regional level only. Procurement for large projects for governmental agencies is centralized, and tenders must be submitted to the Government's Tenders Board, which makes its decision based on price considerations. Tender notices are published in the Government Gazette .
Imports for government consumption are not subject to customs duties or consumption tax, but they are subject to the customs service charge.
° Measures Affecting Imports
I. Documentation& Procedures
Import Documents ° Bill of Lading ° Certificate of Origin ° Commerical Invoice ° Customs Import Declaration ° Packing List
Indicators US $ XCD Documents to import (number) 5 13.44
Time to import (days) 12 32.26
Cost to export ($US per container) 2,138 5,747.37
Nature of Import Duration Cost Cost Procedures (Days) US$ XCD Documents preparation 5 250 672,05 Customs clearance and 1 1,300 3,494.66 technical control
Ports and terminal 5 138 370.97 handling Inland transportation and 1 450 1,209.69 handling Totals 12 2,138 5,747.37
Source: The World Bank
II. Customs Valuation
The transaction value is used to determine the customs value. If this is not possible, the value must be based on the transaction value of similar or identical goods between unrelated buyers and sellers in St. Kitts and Nevis followed by the transaction value of similar imported goods as sold in St. Kitts and Nevis, with deductions for customs duties and taxes, transportation and insurance costs, and a margin of profit.
If none of the previous methods can be used for the determination of value, the computed value, consisting of the sum of the cost of materials and inputs as well as commissions, brokerage and others, and a margin of profit, is to be used. The authorities estimate that the transaction value is used for over 90% of imports.
The Customs Act specifically outlaws the use of minimum customs values. The Act also forbids using the selling price in St. Kitts and Nevis of similar locally produced goods, the price of goods in the domestic market of the country of exportation, and the price of goods for export in a country other than St. Kitts and Nevis, for valuation purposes. The prices of used vehicles imported from Japan are checked against Japanese websites that provide price guidelines
A Customs Appeal Commission, to deal with appeals regarding decisions on valuation, duties, and other customs issues, is in the process of being established; in the interim, appeals are made to Customs on a de facto basis. If the appellant is not satisfied with the decision, the case can be taken to a high court or to the Eastern Caribbean Court of Appeal. 24
III. Rules of Origin
St. Kitts and Nevis adopted, in 1999, the new rules of origin introduced by CARICOM in 1998. In accordance with these rules, duty-free treatment is accorded only to goods shipped between member States that satisfy the CARICOM origin rules. 25
IV. Tariffs International trade taxes are an important source of fiscal revenue. In addition to import tariffs, several levies and charges are applied to trade. Taxes on international transactions raised EC$176.1 million in 2006, up from EC$169.5 million in 2005, accounting for 47.1% of the Government’s tax revenue, and equal to 13.7% of GDP. The chief components of these international taxes were import duties (EC$49.4 million) and the consumption tax on imports (EC$84.1 million), which together provided 35.7% of government tax revenue. The customs service charge, which is set at 6% on the c.i.f. value of all imports, raised another EC$34.1 million.
24 WTO document. St. Kitts and Nevis TPR 2006 25 WTO document. St. Kitts and Nevis TPR 2006
Table III.1 Trade-related taxes, 2007-08 2007 (estimates) 2008 (projections) 2008 EC$'000 EC$'000 % of total tax revenue International trade/transactions taxes 166,193 183,230 41.6 Consumption tax 78,146 82,095 18.6 Import duty 46,928 49,274 11.2 Customs service charge 33,801 35,491 8.1 Transaction-based tax 0 8,727 2.0 Travel tax 3,283 3,447 0.8 Environmental levy 2,732 2,869 0.7 Excise duty on alcohol & tobacco 900 945 0.2 Mercantile tax 327 343 0.1 Export/excise duty 17 18 <0.1 Parcel tax 17 18 <0.1
Source : St. Kitts and Nevis Government estimates for the year 2007.
Customs Service Charge
A 6% customs service charge (CSC) is applied on all imports. The charge is applied on the c.i.f. value of the customs declaration. Exemptions from the CSC are granted to imports by governmental institutions, enclave manufacturers, as well as for imports of foodstuffs less than 30 kg. A drawback is available for manufacturing enterprises that paid the CSC on imported inputs and subsequently export the processed goods.
- Exemptions
Tariffs for goods may be maintained at rates below the CET and included in the List of Conditional Duty Exemptions to the CET, which states the purposes for which the goods may be admitted free of import duty or at a rate lower than the CET. St. Kitts and Nevis, as a less developed country within CARICOM, may import all inputs duty-free instead of at the CET rate of 5%. The List of Items Ineligible for Duty Exemption includes goods that may not be exempted in part from tariffs or in whole, nor imported at a reduced rate when imported for use in an approved industry under some incentives programmes. Goods on this list are generally produced in the CARICOM region in quantities considered adequate to justify the application of tariff protection.
Tariff preferences
Duty-free access is granted by St. Kitts and Nevis to imports from other CARICOM countries, provided they meet the CARICOM rules of origin criteria.
Other levies and charges
Consumption tax
Imports as well as domestic products are subject to a consumption tax. The general rates are 22.5% for goods and 4% for professional services.
A number of products are subject to higher ad valorem rates. For imports, the consumption tax is levied upon importation and collected at the point of entry; it is calculated on the c.i.f. value plus import duties. For domestically produced goods the consumption tax is calculated on the ex-factory price. A few products are subject to specific consumption tax rates, i.e. tobacco, acetylene, and cement. All agricultural products grown in St. Kitts and Nevis, as well as produce of CARICOM origin, are exempt from the consumption tax.
St. Kitts and Nevis imposes a deposit levy of EC$0.30 per container of imported beer, stout, malt, ale, and aerated drinks in non-returnable bottles. The deposit levy is refunded on re-export of the bottles or if disposal arrangements acceptable to the relevant authorities are made within six months of payment of the deposit.
An environmental levy is imposed on imports of second-hand cars under Environmental Levy. Since 2005, it has been set at a rate of EC$3,500 for cars imported between two and four years after the date of manufacture; and EC$5,000 for cars imported four years or more after the date of manufacture.
For reasons of public health, an excise duty at a rate of 15% was introduced in 2006 on alcoholic and tobacco products in 2006. It is levied on the c.i.f. values of these goods plus any applicable import duties and customs service charge.
V. Import prohibitions, restrictions, and licensing
The Ministry of Foreign Affairs, International Trade, Industry, Commerce and Consumer Affairs is in charge of granting import licences. Licences are typically valid for three months, and are not transferable. Applications are generally processed within 24 hours. Except for eggs and some agricultural products produced in commercial quantities, licensing is usually automatic. However, if there is an increase in local production, some licences for imports of agricultural products have been denied. In these instances, the applicant is given the reasons for the denial.
Eggs may be imported only by domestic egg producers whenever domestic production is insufficient. Also, imports of a number of vegetables (cabbages, carrots, onions, sweet peppers, tomatoes, and white potatoes) are subject to seasonal import restrictions. Licences are granted to import these items from outside of CARICOM only when domestic production cannot meet demand.
Permits are required for imports of any live animals, poultry or birds or carcasses and parts thereof, plants, planting materials, and pesticides. The importation of arms and ammunition requires a licence from the Commissioner of Police under the Firearms Act. No. 23 of 1967.
VI. Technical regulations and standards
Technical regulations and standards are developed by the Saint Christopher and Nevis National Bureau of Standards, which started operations in 2000. The National Bureau of Standards is under the umbrella of the Ministry of Foreign Affairs, International Trade, Industry, Commerce and Consumer Affairs and is managed by the Standards Council, composed of representatives of the public and private sectors. The
Bureau's statutory function is to prepare, promote, and generally adopt standards. The Bureau also has the mandate to maintain testing facilities, to carry out testing, calibration, and certification, and to publish standards marks.
The adoption/adaptation of technical regulations and standards is prepared in technical committees in the Bureau, and must be approved by the Standards Council, which is in charge of declaring and publishing them. The Bureau is also in charge of making regulations on labelling, on the sale, import or export of goods for which a mandatory standard specification has been declared, and for granting licences to use a standard mark.
The Standards Council may recommend that a standard becomes mandatory. The recommendation is examined by the Ministry of Foreign Affairs, International Trade, Industry, Commerce and Consumer Affairs, which may declare the standard mandatory, by Order, to be implemented through a technical regulation. Standards that may be declared mandatory are CARICOM standards adopted by the Bureau as national standards, or standards that are primarily intended to protect health and safety, ensure quality in goods for export, prevent fraud from misleading advertising, give information to the consumer, and ensure quality in cases of restrained supply. Non-conformity with technical regulations (mandatory standards) is punishable by a fine of up to EC$5,000, or up to two years imprisonment. Conformity may be verified at the border in the case of imports, and through internal checks in the case of domestic products.
VII. Sanitary and phytosanitary measures
The country lacks the infrastructure necessary to conduct testing of plants and animals, apart from inspection of imports and examination of any documentation issued in the exporting country. However, St. Kitts and Nevis maintains a number of sanitary and phytosanitary measures.
All plants, plant products, plant pests, live beneficial organisms, and soils imported into St. Kitts and Nevis must be accompanied by a phytosanitary certificate issued by the appropriate agricultural authority of the exporting country. Plants, planting materials, plant products, and soil also require an import licence from the Minister of Agriculture.
-The importation of any plant, plant part, plant product, or fruit and vegetables from any country infested with the pink/hibiscus mealy bug is prohibited unless certain conditions are met.
-Imports of pesticides require a licence from the Pesticide Board.
-Imports of live animals, birds, poultry, and carcasses require import licences and sanitary certificates. In order to obtain an import licence, an importation permit is required from the Chief Veterinary Officer.
Permanent SPS measures may require the enactment of legislation by Parliament, but the Minister in charge of Agriculture also has the authority to impose measures on an emergency basis.
St. Kitts and Nevis does not have the technical means necessary to conduct laboratory testing of plants or animals. Imports of animals must be accompanied by documents from the exporting country regarding the veterinary testing of the animals: the authorities state that such test results are accepted from all countries. The majority of animal imports are also subject to quarantine, usually for at least one month. This requirement does not apply to animals imported from other Caribbean countries, which supply about one tenth of these imports. The large majority of animal imports are from the United States and Canada.
St. Kitts and Nevis maintains no restrictions on the import and sale of genetically modified organisms or animals fed hormones (or their products).
8. BUSINESS ENVIRONMENT
Out of 183 countries, St. Kitts and Nevis is ranked 95 th concerning the ease of conducting business in the
Doing Business Report. The table below displays the number of days and the required number of procedures
involved when conducting business in St. Kitts and Nevis.
Number of Amt of Days Procedures Starting a business 19 7
Dealing with Construction Permits 139 11
Obtaining Electricity 18 5
Registering Property 81 6
Source: The World Bank Group http://www.doingbusiness.org
Tax or Mandatory Statutory Tax Tax Base Total Tax Rate Contribution Rate (%Profit)
Corporate Income Tax 35% Taxable profits 32.7
Property Transfer Tax 12% Property Value 7.3
Social Security 5% Gross Salaries 5.6 Contributions
Housing and Social 3% Gross Salaries 3.4 Development Levy
Employment Injury 1% Gross Salaries 1.1 Benefit Levy
Severance Payment 1% Gross Salaries 1.1 Fund
Property Tax 5% Property Rental Value 0.7
Fuel Fee Included in price of 0.4 fuel
Vehicle Tax Fixed fee Gross weight of vehicle 0.3
Insurance Tax 5% Insurance Premium + 0.1 max. registration fee
of $30 per policy
Tax on Cheque XCD 0,1 Per cheque 0 Transactions Source: The World Stamp duty on contracts Type of Contract Bank . Retrieved Jan 10 th 2012 from www.doingbusiness.o VAT Value Added (Not rg Included)
Entry and Residence
Work permits are granted on application by employers, provided that no local worker is available, and involve the production of a number of documents, including health certificates. However, under the CARICOM Single Market arrangement, certain categories of workers from Barbados and other CARICOM countries do not need work permits to work in St. Kitts and Nevis. Workers with a university degree, nurses, musicians, media personnel and persons with technical and vocational qualifications among others can travel freely to obtain work in St. Kitts and Nevis once they are on possession of a CARICOM Skilled National Certificate and meet the relevant immigration requirements.
Tourist visas are granted readily, but visas for longer stays involve demonstration of adequate financial resources. It is possible to acquire citizenship by making an investment into the Federation under sub-section (5) of Section 3 of the Citizenship Act 1984. This stipulates that a person is entitled, upon making application to the Minister, to be registered as a citizen of the Federation without voting rights, if the Cabinet is satisfied that the person has invested substantially in the Federation. The minimum investment requirement may be satisfied with a substantial investment of at least USD350,000 or its equivalent in East Caribbean currency in an “approved investment project”. The registration fees currently in force are USD35,000 for head of household (male or female), USD15,000 for spouse, and USD35,000 for each adult family member or other adult.
Each citizenship certificate of registration is USD47 and the cost for each passport is USD13. Every citizenship application must be made on the prescribed form which must be submitted together with various documents relating to the applicant's identity, civil status, criminal record, financial resources, and health. All documents must be in English or translated into English, and all photocopies of any document submitted must be notarized and properly certified.
A passport is valid for ten years, unless otherwise stated. It remains the property of the Government of the Federation and may be withdrawn at any time. 26
Banking Institutions
° Bank of Nova Scotia ° First Caribbean International Bank ° Royal Bank of Canada ° St. Kitts Nevis-Anguilla National Bank ° Development Bank of St. Kitts & Nevis
Banks are open Monday-Thursday 8am-2pm; Friday 8am-4pm. Each bank provides 24 hour ATM services where you can get cash advances from your VISA or MasterCard. You can also withdraw from or check the balance of the primary chequing and savings accounts linked to your bankcard, via the PLUS/Electron or Cirrus/Maestro networks. 27
26 http://www.lowtax.net/lowtax/html/stkitts_nevis/jnvcfir.html#economy 27 www.stkittstourism.kn/explore-st-kitts-facts.php