St. Vincent and the Grenadines’ Attractive Tax Regime and Quick Registration for International Business

Non-resident members of an LLC are exempt from estate tax, inheritance tax, succession tax, or gift tax for any economic interest related to the LLC.
In this blog we’ll cover the legal requirements and benefits of the six (6) types of international business entities that exist under SVG IFS
  1. Limited Liability Companies (LLCs) – tax exempt
  2. Business Companies (BCs)
  3. Mutual Funds
  4. International Banks
  5. Trusts
  6. International Insurance Companies

1. LLCs

A Limited Liability Company or LLC is a simple corporate structure. It shields its owners’ assets in the event of corporate losses. LLCs provide a simple, flexible structure for asset protection, fund management and global trading.

LLCs are registered in St. Vincent and the Grenadines (SVG) within 24 hours.

 

Owners of an LLC are called members. They are governed by an operating agreement. There are no directors or shareholders in an LLC.

In SVG both single LLCs and series LLCs are permitted. Incorporating a single LLC or series LLC in SVG is straightforward.  Only the articles of formation, registration, and annual fee are required.

Tax exemptions for LLCs in SVG

LLCs incorporated in SVG and generating income outside of SVG and are exempt from:

  • Corporate tax
  • Income tax
  • Withholding tax and
  • Capital gains tax

 

Non-resident members of an LLC are exempt from estate tax, inheritance tax, succession tax, or gift tax for any economic interest related to the LLC.

2. Business Companies
(formerly international business companies)

BCs are governed by the Business Companies (Amendment and Consolidation)
Act, Chapter 149. BCs are incorporated within 24hrs of the receipt of the
application from a licensed Registered Agent in SVG. The Articles of
Incorporation accompanied by the requisite registration and annual fee will
suffice for the purposes of incorporation.

Tax exemptions for BCs in SVG
Corporate income tax for BCs is charged only on income from direct and indirect sources in SVG. Income from sources outside SVG is tax exempt. [Read more about this here]

Types of BCs

Ordinary/Limited

– Limited by Shares

Limited Duration

– incorporated for a maximum of thirty years.

Continued

– re-domiciled from another jurisdiction to SVG.

Hybrid

– owned by both members and shareholders.  Shareholders have legal control and voting rights. Members have contingent liability to guarantee a contribution to the debts of the company.

Segregated Cell Companies

– may be registered in SVG where, inter alia, it is, or on its incorporation will be, recognized as an accredited or private fund or registered as a public fund or may obtain an international insurance licence – (Section 112 (2) (c) of the IBC Act).

The SCC may create one or more Segregated Cells (SC) for the purpose of segregating the assets and liabilities of the SCC. The assets of the SCs are segregated into separate accounts that are kept separate from the general assets of the SCC and separate books are kept for each SC.

The SCC must obtain the approval of the Authority in order to create a SC.

SCCs are registered in SVG within 24 hrs.

Incorporation time

24hrs

Apostille and Time

24hrs

Continuation (Re-Domicile from another Jurisdiction to SVG)

24hrs

Shares

Registered
/Ordinary shares

Directors

Must have minimum of one director- individual or company directors permitted. Director details must be filed with the FSA. A Register of Directors must be maintained at the office of the Registered Agent.

Shareholders

Must have minimum of one shareholder- individual or company shareholders permitted. Shareholder details must be filed with the FSA. A Register of Shareholders must be maintained at the office of the Registered Agent.

Officers

Not required.

Meetings

May be held anywhere in the world.

Who may incorporate BCs?

Licensed Registered Agents & Trustees in SVG

Restrictions?

– Restrictions? A BC cannot carry on any activity for which it requires a licence granted by the Authority unless such a licence has been granted. (e.g.: Mutual Funds business, International Banking Business, International Insurance business).

3. Mutual Funds

Mutual Funds are regulated by the Mutual Funds Act Chapter 154.  Both Public and Private Mutual Funds may be registered in SVG.

A public Fund is a Fund which issues shares to the general public.   There are no capital adequacy requirements or minimum subscription limits placed on public funds.

A private or accredited fund is a fund that either has no more than fifty (50) investors or issues shares on a private basis. Mutual Fund Manager and Administrator licenses are also available.

Fund Manager and Fund Administrator Licences are also required or these can be recognized if already licensed in other jurisdictions.

The Application processing time is between 4 – 6 weeks for due diligence checks and analyses.

If you need more information on how to set up an international business entity in SVG or you would like to get started, you may contact a Registered Agent from the list provided here.

4. International Banks

International Banks are governed by the International Banks Act, Chapter 99 (find it here).  To obtain an international banking license from the Financial Services Authority, the company has to ensure that its operations can adequately be defined as banking business. Banking business according to the International Banks Act, Chapter 99 of the Revised Laws of Saint Vincent and the Grenadines, 2009 is described as:

  1. The business of receiving funds through
  • the acceptance of monetary deposits that are repayable on demand or after notice or any similar operation,
  • the sale or placement of bonds, certificates, notes or other securities and the use of them, either in whole or in part, for loans or investment for the risk of the customer; and
  1. Any other activity recognised by the Central Bank or the Authority as customary banking practice and which a financial institution may additionally be authorised to do.

An entity must first obtain a license from the FSA before it engages in banking business. The two classes of international banks that are licensed by the FSA are:

–       Class A with capital requirements of US$3M and a statutory deposit of US$500,000. Class A imposes no restrictions on the international bank’s offshore business activities; and

–       Class B with capital requirements of US$0.5M and a statutory deposit of US$100,000.00. Class B allows the international bank to conduct business only with non-resident persons specifically named in an undertaking accompanying the licence application.

In addition to the above requirements, all international banks are required to have a physical place of business in St. Vincent and the Grenadines, a minimum of two employees (one at senior management level) and have at least two directors approved by the FSA, one of which must be a resident of St. Vincent and the Grenadines.

International banks are not allowed to conduct banking business with residents of SVG,  invest in any asset that represents a claim on any resident or buy bonds or other securities issued by the state. All international banks are subject to onsite inspections at least once every 12-18 months, and on a risk-sensitive basis.

The Application processing time is between 4 – 6 weeks to facilitate the undertaking of due diligence checks and analyses.

5. Trusts (formerly International Trusts)

Trusts in SVG are governed by the Trust Act Chapter 491.  A Trust created outside of SVG may be registered by the FSA through a licensed Registered Agent & Trustee, who deals with the filing of a Trust Deed or Settlement. Once this is done,  a Certificate of Registration is issued.    

“Trusts are used for estate planning and the general nature of assets held in trust include company shares, property, other assets (yachts, cars, pieces of art, chattel), investments, and holding of bank accounts.”

Corporate income tax for Trusts is charged only on income from direct and indirect sources in SVG. Income from sources outside SVG is tax exempt. [Read more about this here]

6. International Insurance Companies

The flexibility of the insurance regime means that companies of varying sizes may undertake a diverse range of activities.  The Saint Vincent and the Grenadines International Insurance Act permits five (5) classes of international insurance companies, namely:

–        Class I- Unrestricted

Insurers can carry on any international insurance business, including long term insurance.

–        Class II -General

Insurers can carry on general but not long-term international insurance business.

–        Class III- Association

Insurers can carry on general and long-term international insurance business with two or more owners of the insurer and/or their affiliates, and up to 30% of business with persons who are not owners of the insurer or their affiliate.

–        Class IV – Group

Insurers can carry on general and/or long-term international insurance business with one owner, its affiliates and employees.

–        Class V- Single

Insurers may carry on international insurance business with the sole owner of the insurer, in the case of a company, or with the beneficial owners of the insurer, in the case of a trust.

The Capital requirements vary by class with higher requirements for higher risk firms.

Insurance Managers, Agents & Brokers are required to apply for a certificate of authority under Section 30 of the Act. 

The application shall; be made to the Authority in the form prescribed in the regulations and accompanied by the prescribed non-refundable application fee.

 

The applicant is also required to submit information relating to:  

  • The proposed class of the insurance business to be carried out;
  • The agency agreement between them and the insurance company (in the case of an insurance agent); and
  • Proof of experience in insurance business.

 

The Application processing time is between 4 – 6 weeks to facilitate the undertaking of due diligence checks and analyses