Review of Amendment to the Income Tax Act 1989 Instrument No. 9 of 2001

Mr. Anthony Bristol July 26, 2001

The amendment seeks amongst other things to provide an incentive for service providers licensed as registered agents or trustees (trust companies) and other professionals providing services to the International Financial Services sector.

For entities licensed under the Registered Agent and Trustee Licensing Act the incentive is a blanket one against all profits as follows:

. 100% allowance in years 1-4
. 75% allowance in years 5-7
. 50% allowance in years 8-10

It is important to note that the corporate tax rate is 33.33%.

Where a person derives income from the provision of professional services other than through an entity licensed under the RATLA, a foreign tax credit will be allowed in respect of the earnings from the International Financial Services sector. The percentage relief will vary from 35% to 95% for a period of 10 years depending on the percentage of profits from foreign currency. The profits from foreign currency earnings which determines the level of relief shall be deemed to be profits arrived at by the formula:

Foreign currency earnings X net profits
--------------------------------
Total Gross earnings

The legislative intent seems to be to encourage the local trust companies to invest in the marketing and development of the industry and to benefit directly from incorporation and basic trust services as well as from other professional services including mutual fund services, audit/accounting services insurance management and administrative services. It is anticipated that these benefits will also attract established providers form other jurisdictions to seek to relocate part if not all of their operations into St. Lucia.