WORLD TRADE
ORGANIZATIONG/SCM/N/95/KNA
G/SCM/N/99/KNA
3 July 2003
(03-3564)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
New and Full Notification Pursuant to Article XVI:1
of the GATT 1994 and Article 25 of the SCM Agreement
Extension under SCM Article 27.4 of the Transition Period for the
Elimination of Export Subsidies Pursuant to the Procedures
in Document G/SCM/39
ST. KITTS AND NEVIS
The following communication, dated 30 June 2003, has been received from the Ministry of
International Trade of St. Kitts and Nevis.
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St. Kitts and Nevis hereby submits its notification with respect to its application of the Fiscal
Incentives Act No. 17 of 1994.  This notification is submitted both in the context of the Article 27.4
process and pursuant to Article 25, as this year is a new and full notification year.
This programme has not been modified in any way so as to make it more favourable
according to the standstill obligation in G/SCM/39 paragraph (a).
St. Kitts and Nevis wishes to emphasize that the application of this programme is extremely
critical given their economic, financial and development needs.
* * *
The attached, as per paragraph 1(b) of the procedures for extension under SCM Article 27.4
in G/SCM/39, is the notification in respect of the Fiscal Incentives Programme identified in
G/SCM/N/74/KNA.  This programme is contained in section 1 of the notification.
The programme description is as of 30 June 2003, and is identical to that as of
1 September 2001.
The relevant sections of the legislation underlying the notified programmes are attached to the
notification (Attachment 1).G/SCM/N/95/KNA
G/SCM/N/99/KNA
Page 2
SECTION II
Definitions
• An approved enterprise means an enterprise declared by Order of the Governor under section 6
for the purpose of conferring a benefit under this Act.
• A highly capital intensive industry means one such industry whose capital investment is not less
than US$25 million.
• The Tax Holiday period and classification of Approved Enterprises are found in Schedule III of
the Act which is attached.
• Local value added is defined as the amount realised from the sales of the product over a
continuous period of 12 months, minus the cost of imported raw materials, components, parts of
components, fuels and services, and the wages and salaries paid to foreign nationals.
SECTION III
Official Notification
1. Title of the programme for which extension is requested pursuant to procedures in G/SCM/39
Fiscal Incentives Act No. 17 of 1994.  An Act to provide incentives to industry.
2. Period covered by the notification
The programme description is as of 30 June 2003, and is identical to that as of
1 September 2001.
The statistical data provided under data points 7 and 9 covers fiscal 2000-2001.
3. Policy objective and/or purpose of the subsidy
The objective of this programme is to stimulate export performance, support investment,
economic activity and promote diversification in traditional and non-traditional products.
4. Background and authority for the subsidy
Background
The Government of St. Kitts and Nevis considers that appropriate conditions for encouraging
foreign direct investment is to be promoted in  order to ensure the economy remains in a viable
position.
Authority
No. 17 of 1974 – Fiscal Incentives Act of St. Kitts, Nevis and Anguilla.G/SCM/N/95/KNA
G/SCM/N/99/KNA
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5. Form of the subsidy
The subsidy takes the form of a tax exemption.
6. To whom and how the subsidy is provided (whether to producers, exporters or others),
through what mechanisms, whether it is a fixed sum or fluctuating amount per unit and, if the
latter, how the amount is determined
The Fiscal Incentives Act allows for the granting of a tax holiday of up to fifteen years, for
the manufacture of approved products by approved enterprises.  The duration of these concessions is
in accordance with the local value added generated.  In this respect, the Act classifies these approved
enterprises as follows:
1. Group 1 enterprises, where local value added is 50% or more of sales, may enjoy a
tax holiday of up to 15 years.
2. Group 2 enterprises, where local value added is between 25%-50% of sales, may
enjoy a tax holiday of up to 12 years.
3. Group 3 enterprises, where local value is between 10%-24% of sales, may enjoy a tax
holiday of up to 10 years.
4. Enclave enterprises, where production is exclusively for export, may enjoy a tax
holiday of up to 15 years.
Where an approved enterprise is engaged in a highly capital intensive industry it may receive
some benefit for a period up to 15 years.
The Act also grants import duty exemptions  for the importation of machinery equipment,
spare parts, building materials, raw materials and others, as appropriate to be used in eligible
enterprises.
The Fiscal Incentives Act No. 17 of 1974 further provides for income tax relief under certain
circumstances once the tax holiday period has expired.  This relief is contingent on export
performance.  It is granted on the export profits of an enterprise accruing from its exports of its
approved product.  Relief is provided for non-traditional exports to all countries; however, in the case
of exports to Guyana, Jamaica and Trinidad and Tobago, the period of relief is of only five years
immediately following the expiration of the tax holiday period.
(Schedule II part two of the Act attached explains the method of calculating export allowance).7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual
budgeted amount for this subsidy (indicating, if possible, the average subsidy per unit in the
previous year).  Where provision of per unit subsidy information (for the year covered by the
notification, for the previous year or both) is not possible a full explanation should be
provided
Given the nature and coverage of the programme there are no statistics available which reflect
the amount of subsidy per unit.  Further there is no provision within our annual budget to determine
the amount of funds allocated to this form of bene fit provided for approved enterprises because the
nature of assistance is revenue foregone.G/SCM/N/95/KNA
G/SCM/N/99/KNA
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Our limited technical and human capacity in the area of data collection in general and in
statistics processing in particular do not permit us to effectively collect, analyse and compile the
relevant data as required.  However, just recently the Customs Department made some progress in
improving its database system which would help in processing relevant data.
The data submitted from the Customs Department revealed the following:The total amount of the customs duties that the government forewent as a result of the
benefits granted under the Fiscal Incentives Programme for the past three months including
November, December and January were EC$809,494.78, EC$454,496.46, and EC$1,273,736.19
respectively.  Attached in Section Two (2) [Appe ndix 1] is a table showing a breakdown of totals
from the different Enclave industries.
N.B., The totals shown above with respect to re venue foregone are only imports through the seaport.
The totals for the airport are recorded manually and, as indicated earlier, given our limited technical
and human capacity it is difficult to assess this information thus making it readily available.
8. Duration of the subsidy
The duration of the subsidy is subject to St. Kitts and Nevis’ rights and obligations under the
WTO Agreements and in particular the SCM Agreement.
9. Statistics on the impact of the programme
The following table shows the total value of St. Kitts and Nevis foreign trade with world
partners on all commodities during the period of 2000 and 2001.
Year Imports ($EC) Domestic Exports
($EC)Re-Exports ($EC)
2000 529,134,040 78,813,717 9,742,881
2001 510,832,194 77,483,249 6,283,318G/SCM/N/95/KNA
G/SCM/N/99/KNA
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ATTACHMENT I
SCHEDULE ISection 2
MEMBER STATES
(a) Antigua Jamaica
Barbados Montserrat
Belize St. Kitts/Nevis/Anguilla
Dominica St. LuciaGrenada St. Vincent
Guyana Trinidad and Tobago
(b) any other state of the Caribbean region that becomes a member of the
Common Market.
SCHEDULE II
PART 1
EXPORTS TO THE FOLLOWING TERRITORIES ARE
NOT ELIGIBLE FOR EXPORT ALLOWANCE
Antigua Grenada
Barbados Montserrat
Belize St. Lucia
Dominica St. Vincent
PART 2
METHOD OF CALCULATING EXPORT ALLOWANCE
1. An export allowance set off for the purposes of section 16 shall be calculated as
follows:
Export profits as a percentage Rebate of income tax as a
                         of total profits percentage of income tax
   on export profits
10 but under 21 25%
21 but under 41 35%
41 but under 61 45%61 and over 50%.
2. For the purposes of calculation -(a) "export profits as a percentage of total profits" shall be deemed to be “export sales
as a percentage of total sales”Section 16G/SCM/N/95/KNA
G/SCM/N/99/KNA
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(b) profit attributable to exports shall be taken to be the amount resulting from the
formula P x E where –
                              S
(i) "P" represents the chargeable profit of a company for its year of
income;
(ii) "E" represents the proceeds of sales (ex-factory) of the output of a
company exported during its year of income;
(iii) "S" represents the proceeds of sales (ex-factory) of the total output
of the company during its year of income.
3. In computing the proceeds of all sales for the year of income there shall be
deducted any excise duty paid on goods sold during that year.
SCHEDULE III
TAX HOLIDAY PERIODS
   Classification of
Approved Enterprise Tax Holiday Period
Group Years
Group I Enterprise 15
Group II Enterprise 12
Group III Enterprise 10Enclave Enterprise 15Sections
11, 12,19(2)
W.F. GLASFORD
Speaker
Passed in the House of Assembly this 17th day of April, 1974.
E. JAMES FLEMING
Ag. Clerk of the House of Assembly.
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