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St Vincent And The Grenadines 2010 Budget Presented

Monday, February 8, 2010

The Prime Minister and Finance Minister of St Vincent and the Grenadines, Ralph Gonzalez, delivered his ninth budget speech this month.

Although Gonzalez’s budget was tax-light, he disclosed that measures would introduced in the near future to again reduce the tax burden on companies. He also sought to assuage fears over the territory's 'grey-listing', confirming that the SVG would be removed from the OECD grey-list before the March 2010 deadline to avoid sanctions.

In his budget speech, Gonzalez stated:

“My government is determined to maintain and further enhance a good investment climate. The central elements in this regard revolve around:

  • The maintenance of the macro-economic fundamentals of a stable currency, relatively low inflation, fiscal soundness, enhanced competitiveness, increased productivity;
  • political stability, safety and security; sensible and practical, but not overbearing Regulations;
  • a fair, balanced and facilitating regime of taxation;
  • a well-functioning, accommodating financial and banking system;
  • a sound and competitively-priced infrastructure of communications (air, sea and land);
  • a democratic system of good governance, including a sound judicial system; and a trained, and trainable, workforce and a flexible labour market.”

“My government has been focused on securing these essentials, and more, for the private sector and the nation as a whole. But as always, much more, can and should be done. In respect of specific sectors or types of business, there have been targeted strategic interventions to facilitate private sector development.”

“Across the board there has been a reduction of the standard rate of company tax and personal income tax from 40% in 2001 to 32.5% at present. My government intends to reduce this further as soon as the economic circumstances permit. Exporters to CARICOM and extra regional markets have taxation rates as low as 15%.”

Turning to discuss tax information exchange, Gonzalez noted the territory's placement on the OECD grey list in April 2009, which signified that the territory had ‘committed to the internationally agreed tax standard but had not yet substantially implemented its commitment.’

“St. Vincent and the Grenadines is presently described by the OECD as a 'tax-haven' as a direct result of its present OECD grey-listed status and this is clearly a matter of concern for the jurisdiction. St. Vincent and the Grenadines objects to such a negative labeling, especially unilaterally, as experience has illustrated that the stigma of such nomenclature is difficult to eradicate,” Gonzalez continued. He added:

“St. Vincent and the Grenadines has therefore been making arduous efforts to become delisted and placed on the OECD white-list. Accordingly, we have been involved in extensive bilateral negotiations with OECD and other countries in order to obtain the 12 required Tax Information Exchange Agreements (TIEAs).”

“To date, St. Vincent and the Grenadines has already established nine TIEAs with Aruba, Austria, Belgium, Denmark, Ireland, Liechtenstein, the Kingdom of the Netherland Antilles and the United Kingdom of Great Britain and Northern Ireland. St. Vincent and the Grenadines is also involved in negotiations for the establishment of TIEAs with nine other countries including Australia, Germany, New Zealand, Sweden, Norway, Finland, Iceland, the Faroes and Greenland.”

“Based on the results of St. Vincent and the Grenadines’ efforts thus far with TIEAs which have been established and are presently being pursued, there is now a clear and legitimate expectation on St. Vincent and the Grenadines’ part that is would be removed from the Grey-list by the OECD stipulated deadline in March 2010,” he informed.