Saint Lucia is a member of the Organization of Eastern Caribbean States (OECS) and the Eastern Caribbean Currency Union (ECCU). Saint Lucia had an estimated Gross Domestic Product (GDP) of $2.122 billion in 2019 according to the latest figures obtained from the World Bank. Tourism is Saint Lucia’s main economic sector, while real estate and transport are other leading sectors. The COVID-19 pandemic has significantly impacted Saint Lucia’s economy, experiencing an 18.9 percent contraction in 2020. The International Monetary Fund (IMF) forecasts 3.1 percent growth in 2021. The government remains committed to creating a welcoming and open business climate to attract more foreign investment to the country. Investment opportunities are focused primarily in tourism and hotel development, information and communication technology, manufacturing, international financial services, agribusiness, and creative industries.
Saint Lucia ranked 93 out of 190 countries in the 2020 World Bank’s Doing Business Report.
The Government of Saint Lucia provides several incentives to encourage domestic and foreign private investment. For example, foreign investors in Saint Lucia can repatriate all profits, dividends, and import capital.
The Saint Lucia legal system is based on the British common law system, but its civil code and property law are greatly influenced by French law. Saint Lucia does not have a bilateral investment treaty with the United States, but it has bilateral investment treaties with the United Kingdom and Germany.
In 2014, the Government of Saint Lucia signed an Intergovernmental Agreement in observance of the U.S. Foreign Account Tax Compliance Act (FATCA), making it mandatory for banks in Saint Lucia to report the banking information of U.S. citizens.
|TI Corruption Perceptions Index||2020||N/A||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2020||93 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2020||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2019||412||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita ($M USD)||2019||11,020||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
4. Industrial Policies
The Government of Saint Lucia provides incentives to encourage investment by providing tax and non-tax concessions to businesses that can add value to the country’s economic development. Approval for incentives is granted by the Cabinet upon application, taking into consideration the type, size, scope, and employment potential of the business.
Saint Lucia’s Trade License Act, Aliens Licensing Act, International Business Companies Act, Development Incentives Act, Special Development Areas Act, Income Tax Act, Free Zones Act, Fiscal Incentives Act, Tourism Incentives, and Tourism Stimulus and Investments Act together constitute a broad framework of incentives for foreign investors.
Except for pork and chicken, there are no requirements for an enterprise to purchase a fixed percentage of goods from local sources. Companies purchasing chicken must purchase a minimum of 28 percent locally produced chicken. Companies purchasing pork must purchase a minimum of 40 percent locally produced pork.
The Fiscal Incentives Act of 1974 provides for fiscal incentives to facilitate local and foreign investment in the productive sectors of Saint Lucia’s economy. The law gives export-oriented manufacturing enterprises special consideration. Investors may apply for incentives with the relevant ministry or ministries, providing a copy of the application to Invest Saint Lucia. The criteria for fiscal incentive qualification are that an enterprise must be incorporated and registered in Saint Lucia; contribute to the economic development of Saint Lucia; utilize domestic human and natural resources; form linkages with other economic sectors; contribute to foreign exchange earnings; train local personnel; and introduce plant upgrades via technological transfers.
The Fiscal Incentives Act provides a list of incentives, including a tax holiday of up to 15 years for approved projects, a waiver of import duty on imported machinery and plant equipment, a waiver of import duty on imported raw and packaging materials, and an export allowance on export earnings. Under the Fiscal Incentives Act, four types of enterprises qualify for tax holidays. The length of the tax holiday for the first three depends on the amount of value added in Saint Lucia. The fourth type, known as enclave industry, must produce goods exclusively for export outside the CARICOM region. The government amended the Fiscal Incentives Act in early 2020 to expand incentives offered to local businesses as a means of spurring development and investment. The Fiscal Incentives Act now includes four subsectors of the service industry: creative industry, professional services, spa and wellness, and information and communications technology.
|Enterprise||Value Added||Maximum Tax Holiday|
|Group I||50% or more||15 years|
|Group II||25% to 50%||12 years|
|Group III||10% to 25%||10 years|
The standard corporate income tax rate is 30 percent. An International Business Company (IBC) may elect either to be exempted from paying income tax or to be liable for income tax on the chargeable income of the company at the rate of 1 percent. An IBC is not subject to stamp duties, withholding tax, or capital gains tax. Amendments to the Act passed in 2017 sought to encourage IBCs to establish head offices in Saint Lucia by offering various incentives, including a waiver of customs duty on materials, articles, or equipment used exclusively by the head office company and exemption from income tax for employees.
Various special licensing requirements apply to the acquisition of land, development of buildings, expansion of existing construction, and certain aspects of the tourism industry. Individuals or corporate bodies who are not citizens and seek to acquire land may require a license prior to execution, depending upon the amount of land.
The Special Development Areas Act encourages investment in designated areas throughout the island. These areas include Vieux-Fort, Anse la Raye, Soufriere, Canaries, Choc Estate and Dennery. Special concessions offered under this law include exemption on stamp duty and import duty on inputs for the construction of new buildings and the renovation or refurbishment of existing buildings; land and house tax; stamp duty payable by vendors and purchasers on the initial purchase of property; higher tax allowances; and accelerated depreciation. Types of businesses that may qualify for these concessions are residential complexes, commercial or industrial buildings, facilities directed towards the improvement or expansion of services to the tourism sector, water-based activities tourism projects highlighting the heritage and natural environment of Saint Lucia, arts and cultural investments, agriculture-based activities, and fisheries-based activities.
The Tourism Incentives Act effectively provides for earnings exemption from income tax, as a tourism project managed by or on behalf of a company entitled to distribute profits to shareholders or debenture holders as capital monies is free of tax during the two-year period following the end of the tax holiday. The Act also allows for customs duty exemptions and permits the duty-free importation of materials and equipment used exclusively in connection with the construction and equipping of the tourism project. The Tourism Stimulus and Investment Act also allows for the waiver of VAT and property tax.
Foreign Trade Zones/Free Ports/Trade Facilitation
Saint Lucia maintains a Free Zone. It is an enclosed area treated for customs purposes as lying outside the customs territory of the island. Goods of foreign origin may be held pending eventual transshipment, re-exportation and, in some cases, importation into the local market without payment of customs duties. There are various types of companies operating in the Free Zone, including distributors of appliances, furniture, household and office supplies/items; manufacturers; duty-free suppliers of liquor, cigarettes, fragrances, wines, and other items; and pharmaceuticals. There is one American company operating in the Free Zone.
The Free Zone Act aims to promote export development and foreign investment projects in a “bureaucracy-free, duty-free, and tax-free” environment for prescribed activities. Incentives include exemption from customs duties, taxes, and related charges on all classes of goods entering the Free Zone for commercial or operating purposes. There are no restrictions or taxes on foreign exchange transactions and no taxes on dividends for the first 20 years of operation. There are also no work permit fees for management personnel of Free Zone businesses, and no import or export licenses or price controls. Finally, there is no company income tax for the first five years, and thereafter a reduced corporate income tax. The Free Zone Act was last amended in 2018.
Performance and Data Localization Requirements
The Government of Saint Lucia does not mandate local employment. However, the government expects foreign investors to add value to the local economy, which can be achieved by providing local employment.
The 2006 Labor Code provides guidelines for employment, dismissal, and payment of severance and other benefits. It also defines permanent employment, fixed term employment, and contract for service.
The government requires all non-CARICOM citizens and companies intending to conduct business in Saint Lucia and who own more than 49 percent of the company’s shares to obtain a trade license. The ministry with responsibility for commerce issues trade licenses. Under the Foreign National and Commonwealth Citizens (Employment) Regulation, anyone outside OECS seeking to conduct business or be employed in Saint Lucia must apply for a work permit. Applications are available from the Labor Department of the ministry with responsibility for labor. There are no excessively onerous visa, residency, or work permit requirements.
While there are no formal performance requirements, the government encourages investments that create jobs and increase exports and foreign exchange earnings. Foreign investment in Saint Lucia is not subject to any restrictions, and foreign investors are entitled to receive the same treatment as nationals of Saint Lucia. Foreign investors seeking to purchase property for residential or commercial purposes must obtain an Alien Landholding License. No sectors are officially closed to private enterprise, although some activities, such as telecommunications, utilities, broadcasting, banking, and insurance require government licenses. There is no restriction on foreign ownership of a local enterprise or participation in a joint venture. There are no requirements for foreign information technology providers to turn over source code and/or provide access to surveillance (e.g. backdoors into hardware and software keys for encryption, etc.).
6. Financial Sector
Capital Markets and Portfolio Investment
Saint Lucia is a member of the ECCU. As such, it is a member of the Eastern Caribbean Securities Exchange (ECSE) and the Regional Government Securities Market. The ECSE is a regional securities market established by the ECCB and licensed under the Securities Act of 2001, a uniform regional body of legislation governing the buying and selling of financial products for the eight member territories. In 2020, the ECSE listed 155 securities, comprising 135 sovereign debt instruments, 13 equities, and seven corporate debt securities. Market capitalization stood at $1.8 billion. Saint Lucia is open to portfolio investment.
Saint Lucia has accepted the obligations of Article VIII of the International Monetary Fund Agreement, Sections 2, 3 and 4 and maintains an exchange system free of restrictions on making payments and transfers for current international transactions. Foreign tax credit is allowed for the lesser of the tax payable in the foreign country or the tax charged under Saint Lucia tax law. The private sector has access to credit on the local market through loans, purchases of non-equity securities, and trade credits and other accounts receivable that establish a claim for repayment.
Money and Banking System
The eight participating governments of the ECCU have passed the Eastern Caribbean Central Bank Agreement Act. The Act provides for the establishment of the ECCB, its management and administration, its currency, relations with financial institutions, relations with the participating governments, foreign exchange operations, external reserves, and other related matters. Saint Lucia is a signatory to this agreement and the ECCB controls Saint Lucia’s currency and regulates its domestic banks.
The Banking Act is a harmonized piece of legislation across the ECCU. The Minister of Finance usually acts in consultation with, and on the recommendation of, the ECCB with respect to those areas of responsibility within the Minister of Finance’s portfolio.
Domestic and foreign banks can establish operations in Saint Lucia. The Banking Act requires all commercial banks and other institutions to be licensed in order to conduct any banking business. The ECCB regulates financial institutions. As part of ongoing supervision, licensed financial institutions are required to submit monthly, quarterly, and annual performance reports to the ECCB.
In its latest annual report, the ECCB listed the commercial banking sector in Saint Lucia as stable. Assets of commercial banks totaled $2.8 billion (6.4 billion Eastern Caribbean dollars) in at the end of 2019. In its latest annual report, the ECCB listed the commercial banking sector in Saint Lucia as stable. Saint Lucia is well-served by bank and non-bank financial institutions.
The Caribbean region has witnessed a withdrawal of correspondent banking services by the U.S. and European banks. CARICOM remains committed to engaging with key stakeholders on the issue and appointed a Committee of Ministers of Finance on Correspondent Banking to monitor the issue.
In 2019, the ECCB launched an 18-month financial technology pilot to launch a Digital Eastern Caribbean dollar (DXCD) with its partner, Barbados-based Bitt Inc. An accompanying mobile application, DCash was officially launched on March 31, 2021 in four pilot countries including Saint Lucia. The DCash pilot phase will run for 12 months. The digital Eastern Caribbean currency will operate alongside physical Eastern Caribbean currency. Saint Lucia does not have any specific legislation to regulate cryptocurrencies.
Foreign Exchange and Remittances
Saint Lucia is a member of the ECCU and the ECCB. The currency of exchange is the Eastern Caribbean dollar (XCD). Saint Lucia has a fully liberalized foreign exchange system. The Eastern Caribbean dollar has been pegged to the United States dollar at a rate of XCD 2.70 to $1.00 since 1976. As a result, the Eastern Caribbean dollar does not fluctuate, creating a stable currency environment for trade and investment in Saint Lucia.
There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment. Funds can also be freely converted into any of the major world currencies.
Companies registered in Saint Lucia have the right to repatriate all capital, royalties, dividends, and profits. There are no restrictions on the repatriation of dividends for totally foreign-owned firms.
As a member of the OECS, there are no exchange controls in Saint Lucia, and parties can invoice foreign trade transactions in any currency. Importers are not required to make prior deposits in local funds and are not required to surrender export proceeds to government authorities or to authorized banks. There are no controls on transfers of funds. Saint Lucia is a member of the Caribbean Financial Action Task Force (CFATF).
Sovereign Wealth Funds
Neither the Government of Saint Lucia, nor the ECCB, of which Saint Lucia is a member, maintains a sovereign wealth fund.
10. Political and Security Environment
Saint Lucia is considered politically stable and does not have a recent history of political violence. Elections are peaceful and considered generally free and transparent. The next election is constitutionally due in 2021.
11. Labor Policies and Practices
There is no formal national minimum wage in Saint Lucia, though a government-appointed minimum wage commission recommended establishing a minimum wage. The legislated workweek is 40 hours, with a maximum of eight hours per day. Overtime hours are at the discretion of the employer and the agreement of the employee. Pay is time-and-a-half for work over eight hours and double for work on Sundays and public holidays. Workers paid monthly are entitled to a minimum of 14 paid vacation days after one year. Workers paid on a daily or biweekly schedule have a minimum of 14 vacation days after 200 working days.
Special legislation covers work hours for shop assistants, agricultural workers, domestic workers, and workers in industrial establishments. Labor laws, including occupational health and safety standards, apply to all workers whether they are in the formal or informal sectors.
Under the Foreign National and Commonwealth Citizens (Employment) Regulation, anyone outside of the OECS wanting to conduct business or be gainfully employed in Saint Lucia must apply for a work permit. Applications can be obtained from the Labor Department, which is currently under the auspices of the Ministry Education, Innovation, Gender Relations and Sustainable Development.
According to the World Bank, Saint Lucia had an estimated labor force of about 104, 794 in 2020. The most available literacy rate is of 72.8 percent (2010 census). The local state college, which offers technical and vocational courses, meets most of the country’s technical and training needs. There is also a pool of professionals to draw from in fields such as law, medicine, business, information technology, and accounting. Many of the professionals in Saint Lucia trained in the United States, Canada, the United Kingdom, or the wider Caribbean, where many of them gained work experience before returning to the country.
The law, including applicable statutes and regulations, specifies the right of most workers to form and join independent unions, strike, and bargain collectively. The law also prohibits anti-union discrimination, and workers fired for union activity have the right to reinstatement.
The law places restrictions on the right to strike by workers who provide essential services such as police and fire departments, health services, and utilities (electricity, water, and telecommunications). Workers in these organizations must give 30 days’ notice before striking. Once workers give notice, authorities usually refer the matter to an ad hoc tribunal set up under the Essential Services Act. The government selects tribunal members, following rules to ensure tripartite representation. The ad hoc labor tribunals try to resolve disputes through mandatory arbitration. The ministry’s labor commissioner monitors violations of labor law.
The government does not effectively enforce labor laws, and there were insufficient resources for investigation and enforcement of labor standards. The Ministry of Education, Innovation, Gender Relations and Sustainable Development employed fivelabor officers (inspectors) who, due to financial constraints, focused mainly on occupational health and safety concerns. The government sets appropriate occupational safety and health standards.
Violations of the labor code can result in fines of up to $1,371 ($3,704 Eastern Caribbean Dollars) and up to two years in prison. The labor department is currently drafting updated legislation to improve enforcement.
Investors in Saint Lucia are responsible for maintaining workers’ rights and safeguarding the environment. The Labor Commissioner settles disputes over safety issues. Workers have the right to report or leave unsafe work environments without jeopardy to their continued employment.