Objectives:  

Under the Fiscal Incentives Act No. 15 of 1974, Fiscal incentives are granted to Enterprises to facilitate local and foreign investment in the productive sectors of the economy.  Export oriented manufacturing enterprises are especially encouraged to apply for fiscal incentives.

Any manufacturer located in St. Lucia may qualify for these incentives if the enterprise manufacturers an approved product (i.e. a product declared by Order of the Cabinet for manufacture by an approved enterprise).  Given Government's policy to increase foreign exchange and the potential impact on the economy, special consideration is given to export oriented manufacturing enterprises.

The Government of St. Lucia provides incentives to manufacturers as a reward for investment in plant and machinery.

Fiscal Incentives Act (1974)

Criteria For Fiscal Incentives Qualification

• The enterprise must be incorporated and registered in St. Lucia
• The enterprise must contribute to the economic development of
  St. Lucia
• The country's human and natural resources must be utilized         
• The enterprise must train local personnel and upgrade its plant through technological transfer
•  The enterprise must form linkages with other economic sectors
• The enterprise must contribute to earnings in foreign exchange.

Fiscal Incentives/Concessions Offered to Industry

Government offers a range of tax and non-tax incentives to the manufacturing sector under the Fiscal Incentives Act No. 15 of 1974.   Approval of an enterprise for these incentives is granted by Cabinet upon application on the prescribed form.  The extent of the incentives varies with:

• the amount of an equity's export business outside Caricom.
• the local value-added content.
• the level of capital outlay of the investment.

Fiscal incentives Include:

• Tax Holiday up to a maximum of fifteen (15) years.
• Waiver of Import Duty and Consumption Tax on imported plant, machinery and equipment
• Waiver of Import Duty and Consumption Tax on imported raw materials and packaging
• Carry forward of losses
• Export Allowance - ( tax relief on export earnings).

Other incentives offered: are also available to manufacturers who may not be eligible for benefits under the Fiscal Incentives Act (1974).  Duty free concessions on machinery, raw materials and packaging may be granted to enterprises which do not qualify for the full range of Fiscal Incentives.  These include waivers of import duty and consumption as on imported plant, machinery and equipment and imported raw and packaging materials.

• Waiver of Consumption tax on raw materials;
• Exemption from payment of Service Charge on raw packaging materials;
  (in accordance with the Service Amendment Act 1999)
• Exemption of the environmental levy on raw and packaging materials;
  (in accordance with the Environmental Levy Act 2000)

The extent of benefits to be enjoyed by an enterprise is related to the contribution which the enterprise, in producing the approved product(s), makes to the national economy.  The contribution of the enterprise is measured in terms of the 'local value added'.  The 'local value added' can be defined as the amount St. Lucia receives in payment from a manufacturer for local raw materials, labour, capital, services etc.  This identifies the value of all local inputs into production (i.e. does not include imports).

Other concessions Available

• Consumption tax retooling allowance ranging from 20% - 60% credit on consumption tax paid the previous year;
• Income tax allowance for the hiring of university graduates;
• Companies with annual sales of $250,000 will be exempted from consumption tax.

  Subject to the approval of the Ministry of Finance, the following benefits also apply:

• An exemption of duties on machinery and equipment and parts thereof, including equipment for the transportation of goods, and materials for use in the approved industry;
• An exemption of building materials for the first installment or extension of industrial enterprises.

Technical Assistance Available to the Manufacturing Sector

The Ministry negotiates with the European Business Assistance Scheme (EBAS), the Export Development Agricultural and Diversification Unit of the Organization of Eastern Caribbean States (OECS/EDADU); and Carib Export, for a 50% rebate monetary contribution for companies to attend trade fairs, training workshops and undertake export marketing activities and product development.  A 50% rebate can also be accessed from the Small Enterprise Development Unit (SEDU) for product development.

MICRO AND SMALL ENTERPRISE CLASSIFICATION

Micro Enterprise

• Five (5) or less persons are employed;
• Annual turnover does not exceed one hundred thousand dollars ($100,000.00);
• Net assets do not exceed seventy-five thousand dollars ($75,000.00);
• Locally owned.

Small Enterprise

• Twenty (20) or less persons are employed;
• Annual turnover does not exceed five hundred thousand dollars ($500,000.00);
• Net assets do not exceed two hundred and fifty thousand dollars ($250,000.00);
• Locally owned.

Applying For Fiscal Incentives
An interview with the potential investor should be conducted by either the Minister, Permanent Secretary, Industry Officer and/or the National Development Corporation.

Companies applying for Fiscal Incentives are required to complete in full two (2) copies of the Fiscal Incentives Application Form along with a Cover Letter providing an overview of the proposed venture.

One copy of the application should be forwarded to the Minister or Permanent Secretary of Commerce, Industry and Consumer Affairs.