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This move will allow corporations to have additional funds for further investment and will hopefully lead to increased compliance. It is envisaged that such a move will make Saint Lucia more attractive as a place to do business and thus will result in increased foreign direct investment.
In the 2014/2015 Budget Statement Prime Minister Dr. Kenny D. Anthony outlined the approach to the changes.
Dr. Anthony stated, “Mr. Speaker, Saint Lucia’s current rate of 30 percent is higher than that of its counterparts in Barbados, Jamaica, Trinidad and Tobago, all of whom are at 25 percent. Interestingly, the global average rate is approximately 24.08 percent. I propose to reduce the corporate tax rate to 25 percent but on a phased basis over a two-year period. I propose a reduction to 28 percent in this fiscal year and the further reduction to 25 percent in the next fiscal year.”
Further, an additional tax deduction of $10,000 for small and medium-sized businesses will be introduced in the next income year. This will eliminate approximately 800 companies from the tax bracket and will lead to $2.2 million in savings annually, for small businesses.
Prime Minister Anthony said this incentive is necessary to provide some relief to the business sector as they seek to meet the challenges of a difficult economic environment.
“I propose to provide additional relief to small-scale incorporated businesses in the form of a small-scale business enterprise deduction in the amount of $10,000. Qualifying companies will deduct $10,000 from chargeable income before computing their tax liability. In other words Mr. Speaker, these companies will pay no tax on the first $10,000 of their chargeable income,” the prime minister explained.
The small-scale business enterprise deduction will be applicable to all sectors but will be granted only to small companies with no other tax waivers or incentives. This deduction will be granted for a period of three years and takes effect in the income year January 2015.