Saint Lucia, in common with a number of other jurisdictions, was required by the European Union (EU) Code of Conduct Group on Business Taxation to introduce economic substance requirements for companies that are tax resident on the island. As a result, Saint Lucia has introduced economic substance legislation commencing 2021. Saint Lucia tax resident companies carrying on relevant activities will be required to meet an economic substance test. Relevant activities are defined as any of the following businesses:
- Banking business.
- Insurance business.
- International mutual funds business.
- Financing and leasing.
- Activities of a company holding tangible assets.
- Activities of a company holding intangible assets.
- Activities of a pure equity holding company.
- Distribution and service centre business.
- A combination of any of the above businesses or activities.
Tax Information Exchange Agreements (TIEAs)
TIEAs provide for the exchange of information on tax matters. TIEAs with Aruba, Australia, Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, the Netherlands, Netherlands Antilles, Norway, Portugal, Sweden, the United Kingdom, and the United States are in force.
United States (US) Foreign Account Tax Compliance Act (FATCA)
On 19 November 2015, the government of the United States and the government of Saint Lucia signed an intergovernmental agreement (IGA) entitled, ‘Agreement between the Government of the United States of America and the Government of St. Lucia to Improve International Tax Compliance and to Implement FATCA’. The IGA requires, in particular, the exchange of certain information with respect to US and Saint Lucia reportable accounts on an automatic basis, pursuant to the provisions of Article 4 of the Agreement between both Governments for the Exchange of Information with Respect to Taxes, done at Washington on January 1987 (the ‘TIEA’).
Multilateral Convention on Mutual Administrative Assistance in Tax Matters
Saint Lucia signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters in November 2016. Under the convention, Saint Lucia will exchange tax information based on OECD standards, but is not required to collect taxes on behalf of another country or provide assistance in the service of related documents.
Common Reporting Standard (CRS)
In November 2014, the G20 countries endorsed a new CRS for automatic exchange of information developed by the OECD. Under the CRS, foreign tax authorities will provide information to the IRD relating to financial accounts in their jurisdiction held by Saint Lucian residents. The IRD will, on a reciprocal basis, provide corresponding information to the foreign tax authorities on accounts held by residents of their jurisdiction in Saint Lucia. Saint Lucia has committed to implementing the CRS by September 2018.
Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS)
In May 2018, Saint Lucia joined the IF on BEPS, becoming the 114th jurisdiction to do so. By joining the IF, Saint Lucia will work on creating an equal footing with all other IF members on the implementation of the BEPS package and on developing further standards to address the remaining BEPS issues. As a signatory to the IF, Saint Lucia has committed to implementing minimum standards related to:
- preferential regimes, including exchange of tax rulings (Action 5)
- treaty abuse (Action 6)
- country-by-country (CbC) reporting to tax authorities allied to wider transfer pricing documentation in Action 13, and
- improved mutual agreement procedures (MAP) for resolving disputes (Action 14).
Subsequent to the OECD's Harmful Tax Practices - 2018 Progress Report on Preferential Regimes, the following regimes have been abolished but grandfathered in accordance with the Forum on Harmful Tax Practices:
- International business company.
- International partnership.
- International trust.