Corporate - Income determinationLast reviewed - 08 February 2023
Inventory is generally valued at the lower of cost or market value. The Saint Lucia IRD will generally accept a valuation method that is in line with the common accounting practice of the particular trade or industry. First in first out (FIFO) or average costing are normally used for both book and tax purposes.
Obsolescence is permitted where it occurs, but there are no provisions to account for monetary inflation on inventory valuation.
There is no tax on capital gains except in instances where such gains comprise a portion of the income-earning activities of the business. In such instances, the corporate tax rate applies.
Dividends are tax exempt in Saint Lucia.
Inter-company dividends are not subject to tax in Saint Lucia.
The corporate tax rate applies to interest income. However, income earned on securities issued by member governments of the Eastern Caribbean Central Bank and income accruing from trading in securities under the Securities Act to any citizen or resident of any member state of the Organisation of Eastern Caribbean States or to any company incorporated in and registered in any member state of the Organisation of Eastern Caribbean States is tax exempt.
Royalty and rental income
The corporate tax rate applies to royalty and rental income. However, rental income from a residential accommodation shall be exempt from tax if certain requirements, as defined by regulations, are met.
Foreign exchange gains/losses
Foreign exchange gains or losses arising from foreign exchange transactions on trading items are assessable or deductible as realised gains or losses if settled within normal credit terms. Gains or losses on other instruments, including inter-company loans, are recognised only when actually realised.
Unrealised exchange gains/losses are not taxable/deductible.
Bribes, kickbacks, illegal payments
Bribes, kickbacks, and illegal payments received by a company are includible in taxable income.
Resident companies are not taxed in Saint Lucia on income deemed to have been earned outside Saint Lucia. Reciprocal understandings exist with some countries for the avoidance of double taxation, and foreign tax is allowed as a credit against tax charged in Saint Lucia. Saint Lucia has no tax treaties with other countries, except for the member states that make up CARICOM. There is an agreement among the governments of CARICOM for the avoidance of double taxation. Where no agreement exists, the foreign tax offset is the lesser of the foreign tax paid or the tax payable on that income in Saint Lucia.
Tax deferral is not permitted in Saint Lucia.