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Saint Kitts and Nevis

Executive Summary

The Federation of St. Christopher and Nevis (St. Kitts and Nevis) is a member of the Organization of Eastern Caribbean States (OECS) and the Eastern Caribbean Currency Union (ECCU).  The government seeks to facilitate a conducive business climate to attract more foreign investment.  St. Kitts and Nevis remains vulnerable to external shocks such as climate change impacts, natural disasters, and global economic downturns.  According to Eastern Caribbean Central Bank (ECCB) figures, the economy of St. Kitts and Nevis had an estimated GDP of $745 million (2 billion Eastern Caribbean dollars) in 2021, after contracting in 2020 due to the ongoing COVID-19 pandemic and the resulting impact on the tourism sector.  The IMF forecasts real GDP growth of 10 percent in 2022, effectively reversing this contraction.

The COVID-19 pandemic significantly reduced the economic gains St. Kitts and Nevis had made in recent years.  The impact of the pandemic on tourism, a mainstay of St. Kitts and Nevis’s economy that generates over 60 percent of GDP, has had ripple effects across the economy.  The government has introduced measures to protect workers and key economic sectors. After the introduction of vaccines in 2021 the government lifted a strict quarantine for visitors, effectively rebooting the tourism industry.

St. Kitts and Nevis has identified priority sectors for investment.  These include financial services, tourism, real estate, agriculture, information technology, education services, renewable energy, and limited light manufacturing.

The government provides some investment incentives for businesses that are considering establishing operations in St. Kitts or Nevis, encouraging both domestic and foreign private investment.  Foreign investors can repatriate all profits, dividends, and import capital.

The country’s legal system is based on British common law.  It does not have a bilateral investment treaty with the United States.  It has a Double Taxation Agreement with the United States, although the agreement only addresses social security benefits.

In 2016, St. Kitts and Nevis signed an Intergovernmental Agreement in observance of the U.S. Foreign Account Tax Compliance Act (FATCA), making it mandatory for banks in St. Kitts and Nevis to report banking information of U.S. citizens.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index N/A N/A http://www.transparency.org/
research/cpi/overview
Global Innovation Index N/A N/A https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 476 http://www.bea.gov/international/
factsheet/
World Bank GNI per capita ($M USD) 2020 19,080 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

2. Bilateral Investment Agreements and Taxation Treaties

St. Kitts and Nevis does not have a bilateral investment treaty with the United States.  It has a Double Taxation Agreement with the United States, but this agreement is limited solely to social security benefits.  St. Kitts and Nevis’s Double Taxation Agreements meet Organization for Economic Cooperation and Development (OECD) standards, as well as Tax Information Exchange Agreements standards.  St. Kitts and Nevis maintains double taxation agreements with several countries including Denmark, Norway, Sweden, and the UK.  It has Double Taxation Conventions (DTCs) with Monaco, San Marino, and some Caribbean Community countries.  St. Kitts and Nevis is a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting and is party to the OECD’s October 2021 deal on the two-pillar solution to global tax challenges, including a global minimum corporate tax. St. Kitts and Nevis is also party  to the following agreements:

The Treaty of Chaguaramas established the Caribbean Community (CARICOM) to promote economic integration among its 15 member states.  Investors operating in St. Kitts and Nevis have preferential access to the entire CARICOM market.  The Revised Treaty of Chaguaramas established the CSME, which permits the free movement of goods, capital, and labor within CARICOM member states.

The Revised Treaty of Basseterre established the OECS.  The OECS consists of seven full members: Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines, and four associate members: Anguilla, Martinique, Guadeloupe, and the British Virgin Islands.  The OECS aims to promote harmonization among member states concerning foreign policy, defense and security, and economic affairs.  The six independent countries of the OECS ratified the Revised Treaty of Basseterre, establishing the OECS Economic Union in 2011.  The Economic Union established a single financial and economic space within which all factors of production, including goods, services, and people, move without hindrance.

The European Community and the Caribbean Forum (CARIFORUM) the CARICOM states signed an Economic Partnership Agreement (EPA) in 2008.  CARIFORUM consists of the independent Anglophone CARCOM member states, the Dominican Republic, and Suriname. The overarching objectives of the EPA are to alleviate poverty in CARIFORUM states, to promote regional integration and economic cooperation, and to foster the gradual integration of the CARIFORUM states into the world economy by improving their trade capacity and creating investment-conducive environments.  The EPA promotes trade-related developments in areas such as competition, intellectual property, public procurement, the environment, and protection of personal data.

The UK and the Caribbean Forum of African, Caribbean and Pacific States (CARIFORUM) states CARIFORUM signed an EPA in 2019, committing to trade continuity after Britain’s departure from the European Union.  The CARIFORUM-UK EPA eliminates all tariffs on all goods imported from CARIFORUM states into the UK, while Caribbean states will continue to gradually cut import tariffs on most of the region’s imports from the UK.

The UK and CARIFORUM signed an EPA in 2019, committing to trade continuity after Britain’s departure from the European Union.  The CARIFORUM-UK EPA eliminates tariffs on all goods imported from CARIFORUM states into the UK, while those Caribbean states will continue to gradually cut import tariffs on most of the region’s imports from the UK.

The objective of the Caribbean Basin Initiative is to promote economic development through private sector initiatives in Central America and the Caribbean by expanding foreign and domestic investment in non-traditional sectors, diversifying economies, and expanding exports.  The Caribbean Basin Initiative permits duty-free entry of products manufactured or assembled in St. Kitts and Nevis into the United States.

The Caribbean/Canada Trade Agreement (CARIBCAN) is an economic and trade development assistance program for Commonwealth Caribbean countries.  Through CARIBCAN, Canada provides duty-free access to its national market for most products originating in Commonwealth Caribbean countries.

6. Financial Sector

St. Kitts and Nevis is a member of the ECCU.  As such, it is also a member of the 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 2021, the ECSE listed 164 securities, comprising 140 sovereign debt instruments, 13 equities, and 11 corporate debt securities.  Market capitalization stood at $1.9 billion.  St. Kitts and Nevis is open to portfolio investment.

St. Kitts and Nevis accepted the obligations of Article VIII of the IMF Agreement, Sections 2, 3 and 4 and maintains an exchange system free of restrictions on making payments and transfers for current international transactions.  The private sector has access to credit on the local market through loans, purchases of non-equity securities, trade credits, and other accounts receivable that establish a claim for repayment.

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.  St. Kitts and Nevis is a signatory to this agreement, and the ECCB controls St. Kitts and Nevis’s currency and regulates its domestic banks.

Domestic and foreign banks can establish operations in St. Kitts and Nevis.  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 as stable.  Assets of commercial banks totaled $2.5 billion (6.8 billion Eastern Caribbean dollars) at the end of 2019.

St. Kitts and Nevis is well served by bank and non-bank financial institutions.  There are minimal alternative financial services.  Some citizens still participate in informal community group lending.

The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S. and European banks.  CARICOM remains committed to engaging with key stakeholders and appointed a Committee of Ministers of Finance on Correspondent Banking to monitor the issue.

In 2019, the ECCB started 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 in March 2021 in four pilot countries including St. Kitts and Nevis.  While initially declared a success, its platform crashed in early 2022 and remained offline for almost two months before resuming in March, raising questions about the project’s reliability. The digital Eastern Caribbean currency was intended to operate alongside physical Eastern Caribbean currency.

St. Kitts and Nevis enacted the Virtual Assets Bill, 2020, to regulate virtual currencies with the expectation that they will become increasingly prevalent.  The bill is intended to facilitate the ease of doing business in a cashless society, and to combat theft, fraud, money laundering, Ponzi schemes, and terrorist financing.

Neither the government of St. Kitts and Nevis, nor the ECCB, of which St. Kitts and Nevis is a member, maintains a sovereign wealth fund.

9. Corruption

The law provides criminal penalties for official corruption, and the government generally implements these laws effectively.  Media and private citizens reported government corruption was a problem.

Public officials are not subject to financial disclosure laws.  The Financial Intelligence Unit and the police force’s white-collar crime unit investigate reports on suspicious financial transactions, but these reports were not available to the public.

Government agencies involved in enforcement of anti-corruption laws include the Royal St. Kitts and Nevis Police Force, the Director of Public Prosecutions, and the Financial Intelligence Unit.  The Financial Intelligence Unit investigates financial crimes, but no independent body has been established to handle allegations of government corruption.

Simone Bullen-Thompson
Solicitor-General
Legal Department
Church Street, Basseterre, St. Kitts and Nevis
Tel: 869-465-2170
Email:  simone_bullen@hotmail.com

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2
Host Country Statistical source* USG or international statistical source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2019 927.4 2019 1,053 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2020 472 BEA data available at
https://apps.bea.gov/international/
factsheet/
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A N/A N/A BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP N/A N/A N/A N/A UNCTAD data available at
https://unctad.org/topic/investment/
world-investment-report

* Source for Host Country Data: Eastern Caribbean Central Bank  https://www.eccb-centralbank.org/statistics/dashboard-datas/ .

Table 3: Sources and Destination of FDI
St. Kitts and Nevis does not appear in the IMF’s Coordinated Direct Investment Survey (CDIS).

Investment Climate Statements
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