Governance, Adaptability and the International Financial Services in St. Vincent and the Grenadines
This blog gives an overview of the political and regulatory landscape that shapes the SVG IFS sector
SVG system of governance
Saint Vincent and the Grenadines (SVG) is an independent nation in the Eastern Caribbean. It is made up of the lush, volcanic mainland St. Vincent and its 32 Grenadine islands and Cays.
SVG is a parliamentary democracy where elections are constitutionally due every five years. There are two dominant political parties, the Unity Labour Party and the New Democratic Party.
SVG is a former colony of Britain and a member of the Commonwealth of Nations. Its Prime Minister is the head of government while the Governor-General serves as a figurehead state representative of the Queen.
SVG has enjoyed free and fair elections since its independence from Britain in 1979. Dr. The Honourable Ralph Gonsalves, leader of the Unity Labour Party is the current Prime Minister.
SVG IFS Regulation
SVG IFS is regulated by the Financial Services Authority (‘the FSA’), which was established by the Financial Services Authority Act. The FSA has an experienced team of professionals who are trained in varying disciplines including law, economics and accounting.
International business incorporations are conducted through SVG ‘Registered Agents and Trustees’ who are licensed and regulated by the FSA under a regime set out by the Registered Agent and Trustee Licensing Act.
The FSA’s duties and functions include:
- Managing, directing, controlling and supervising the sector
- Administering and overseeing the licensing of Registered Agents, Private Trustees, Financial Fiduciaries and their services to ensure compliance
- Incorporation or registration of Business Companies (formerly called International Business Companies), Limited Liability Companies, Segregated Cell Companies
- Administering and overseeing the licensing, regulation and supervision of International Banks, Mutual Funds, International Insurance Companies and Trusts.
- Other institutions that are in place to ensure the sound regulation of the financial services industry are the SVG Financial Intelligence Unit (FIU) and the National Anti-Money Laundering Committee (NAMLC). The FIU is a member of the Egmont Group and has been commended by key states and organizations for its role in anti-money laundering investigations and compliance.
Legislation for SVG IFS
SVG uses the English common law system as a basis. Key pieces of legislation governing the SVG IFS sector include:
- Financial Services Authority Act
- International Business Companies (Amendment & Consolidation) Act
- International Business Companies (Amendment) Act 2018
- Limited Liability Companies Act
- Mutual Funds Act
- International Banks Act
- Registered Agent and Trustee Licensing Act
(Downloads of all SVG IFS governing legislation and regulations can be found on the FSA website and any enquiries can be sent to info@svgfsa.com. Additionally, a list of the licensed Registered Agent and Trustees can be found here.)
Compliance with changing international
tax transparency standards
Governments in the EU and the US are on a mission to receive more tax dollars from their residents and from the global companies originating in their countries. Their efforts target international jurisdictions like SVG in which these companies and individuals form legal entities to conduct business globally.
Additionally, since the 2008 global financial and heinous terrorist acts financed by nebulous sources, there is more global cooperation to prevent money laundering and terrorist financing via illegal use of offshore entities.
Instruments like the OECD’s Global Forum on Harmful Tax Practices, the Common Reporting Standard (CRS) and Automatic Exchange of Information (AEOI); the EU’s list of non-cooperative jurisdictions for tax purposes; and the U.S. Foreign Account Tax Compliance Act (FATCA) all demand greater transparency about and fewer tax benefits for individuals, families, and companies pursuing offshore or cross-border tax minimisation strategies.
SVG is committed to remaining compliant and transparent.
- The country has demonstrated its commitment to global tax transparency and accountability having been rated “Largely Compliant” by the OECD Peer Review Group after the completion of its Phase 1 Review (2011-2012) and Phase 2 Review (2013- 2014).
- SVG is FATCA compliant having signed the Foreign Account Tax Compliance Act (FATCA) Model 1B Agreement with the USA in August 2015 and has enacted relevant legislation to give effect to FATCA in SVG.
- SVG has implemented the OECD Global Forum’s Common Reporting Standard on Automatic Exchange of Information. To this end, SVG signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement and has enacted relevant legislation to give effect to these Agreements.
Pro-business environment
While tax minimisation and privacy have somewhat lessened due to global industry changes, SVG IFS clients still stand to gain from a range of benefits in the jurisdiction.
1. Low operating costs
Registration and incorporation fees are also comparatively lower than jurisdictions like the Cayman Islands and BVI.
Commercial rental in the capital Kingstown can be as low as USD $1 per square foot. At present, there are minimal requirements for international businesses to occupy physical office space and most administrative functions can be undertaken by the supporting Registered Agent and Trustee. In addition, professional salaries tend to be lower than in neighbouring jurisdictions like Barbados.
2. Quick set up times
Business Companies (BCs) in St. Vincent and the Grenadines are incorporated within 24 hours of application to the FSA. Limited Liability Companies (LLCs) are registered within 24 hours.
3. Incentives
SVG has retained several incentives for international businesses over the years.
- There are exemptions on estate and succession taxes as well as on stamp and customs duties.
- Under the existing tax regime Business Companies and Trusts registered prior to January 1, 2019, are exempt from corporate income tax
- LLCs are also exempt from corporate income tax
- There is no withholding tax on dividends in SVG
- Capital gains are not subject to tax
4. Strong, stable telecommunications
SVG has two major telecommunications providers, operating under the brand names Digicel and Flow respectively. They both offer fourth-generation long-term evolution networks (4G LTE) for increased broadband and mobile-specific connectivity and speeds.
In conclusion
SVG is a stable parliamentary democracy and a white-listed, well-regulated and pro-business jurisdiction. The SVG IFS sector continues to adapt to a changing global industry future while providing the best opportunities for international clients.
If you’d like to explore how you can diversify into St. Vincent and the Grenadines through a SVG IFS product and domestic investments a good place to start is with the teams at the FSA and Invest SVG.
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