2021 Investment Climate Statements: Saint Kitts and Nevis
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 gross domestic product (GDP) of $927.4 million (2.5 billion Eastern Caribbean dollars) in 2020, having contracted 11.2 percent mainly due to the ongoing COVID-19 pandemic and the resulting impact on the tourism sector. The International Monetary Fund (IMF) forecasts real GDP growth of -2 percent in 2021.
St. Kitts and Nevis’ ranking in the World Bank’s Doing Business Report remains at the 2020 ranking of 139th out of 190 countries, as the report was not updated during the reporting year.
The COVID-19 pandemic has 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.
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.
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The government of St. Kitts and Nevis strongly encourages foreign direct investment, particularly in industries that create jobs, earn foreign currency, and have a positive impact on its citizens.
The country is home to the ECCB, the Eastern Caribbean Securities Exchange (ECSE), and the Eastern Caribbean Securities Regulatory Commission (ECSRC).
In the federation, each island has a separate investment promotion agency, the St. Kitts Investment Promotion Agency (SKIPA) and the Nevis Investment Promotion Agency (NIPA). Both agencies have introduced several investment incentives for businesses that consider locating in the federation. SKIPA and NIPA provide “one-stop shop” facilitation services to investors, guiding them through the various stages of the investment process.
The federal government encourages investment in all sectors, but targeted sectors include financial services, tourism, real estate, agriculture, information and communication technologies, international education services, renewable energy, ship registries, and limited light manufacturing.
Limits on Foreign Control and Right to Private Ownership and Establishment
There are no limits on foreign control in St. Kitts and Nevis. Foreign investors may hold up to 100 percent of an investment. Local enterprises generally welcome joint ventures with foreign investors to access technology, expertise, markets, and capital.
Foreign investment in St. Kitts and Nevis is generally not subject to any restrictions, and foreign investors receive the same treatment as citizens. The only exception to this is the requirement that foreign investors obtain an Alien Landholders License to purchase residential or commercial property.
Other Investment Policy Reviews
The OECS, of which St. Kitts and Nevis is a member, has not conducted a World Trade Organization (WTO) trade policy review in the last three years.
SKIPA and NIPA facilitate domestic and foreign direct investment in priority sectors and advise the government on the formation and implementation of policies and programs to attract investment. Both agencies provide business support services and market intelligence to investors.
St. Kitts and Nevis ranks 109th of 190 countries in starting a business, which takes seven procedures and about 18.5 days to complete, according to the World Bank’s 2020 Doing Business Report. It is not mandatory that an attorney prepare incorporation documents. A business must register with the Financial Services Regulatory Commission, the Registrar of Companies, the Ministry of Finance, the Inland Revenue Department, and the Social Security Board.
There is no restriction on domestic investors seeking to do business abroad. Local companies in St. Kitts and Nevis are actively encouraged to take advantage of export opportunities specifically related to the country’s membership in the OECS Economic Union and the Caribbean Community Single Market and Economy (CSME), which enhance the competitiveness of the local and regional private sectors across traditional and emerging high-potential markets.
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 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 CARICOM countries. St. Kitts and Nevis is also party to the following agreements:
Caribbean Community (CARICOM)
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.
Organization of Eastern Caribbean 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.
CARICOM-EU Economic Partnership Agreement
The European Union and the CARICOM states signed an Economic Partnership Agreement (EPA) in 2008. 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.
CARIFORUM-UK Economic Partnership Agreement
The UK and the CARIFORUM states signed an Economic Partnership Agreement (EPA) in 2019, committing to trade policy 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.
Caribbean Basin Initiative
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.
Caribbean/Canada Trade Agreement
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.
3. Legal Regime
Transparency of the Regulatory System
The government of St. Kitts and Nevis provides a legal framework to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety. The St. Kitts Ministry of Finance and SKIPA and the Nevis Ministry of Finance and NIPA provide oversight of the system’s transparency as it relates to investment.
The incorporation and registration of companies differs somewhat on the country’s two constituent islands. In St. Kitts, the Companies Act regulates the process. On Nevis, the Nevis Island Business Corporation Ordinance regulates the incorporation of companies. There are no nationality restrictions for directors in a company, and in general, national treatment is applied. All registered companies must have a registered office in St. Kitts and Nevis.
Rulemaking and regulatory authority lies with the unicameral parliament of St. Kitts and Nevis. The parliament consists of 11 members elected in single-seat constituencies (eight from St. Kitts and three from Nevis) for a five-year term.
Although St. Kitts and Nevis does not have legislation that guarantees access to information or freedom of expression, access to information is generally available in practice. The government maintains an information service and a website, where it posts information such as directories of officials and a summary of laws and press releases. The government budget and limited debt obligation information are available on the website: https://www.gov.kn/. Accounting, legal, and regulatory procedures are generally transparent and consistent with international norms. The International Financial Accounting Standards, which stem from the General Accepted Accounting Principles, govern the accounting profession in St. Kitts and Nevis.
The independent Office of the Ombudsman guards against abuses by government officers in the performance of their duties. The Ombudsman is responsible for investigating any complaint relating to any decision or act of any government officer or body in any case in which a member of the public claims to be aggrieved or appears to the Ombudsman to be the victim of injustice due to the exercise of the administrative function of that officer or body.
Regulations are developed nationally and regionally. Nationally, the relevant line ministry reviews regulations. Ministries then submit the results of their reviews to the Ministry of Justice, Legal Affairs and Communications for the preparation of the draft legislation. Subsequently, the Ministry of Justice, Legal Affairs and Communications reviews all agreements and legal commitments (national, regional, and international) to be undertaken by St. Kitts and Nevis to ensure consistency prior to finalization. SKIPA has the main responsibility for project-level supervision, while the Ministry of Finance monitors investments to collect information for national statistics and reporting purposes.
St. Kitts and Nevis’s membership in regional organizations, particularly the OECS and its Economic Union, commits it to implement all appropriate measures to ensure the fulfillment of its various treaty obligations. For example, the Banking Act, which establishes a single banking space and the harmonization of banking regulations in the Economic Union, is uniformly in force in the eight member territories of the ECCU, although there are some minor differences in implementation from country to country. The enforcement mechanisms of these regulations include penalties or legal sanctions.
International Regulatory Considerations
As a member of the OECS and the Eastern Caribbean Customs Union, St. Kitts and Nevis subscribes to a set of principles and policies outlined in the Revised Treaty of Basseterre. The relationship between national and regional systems is such that each participating member state is expected to coordinate and adopt, where possible, common national policies aimed at the progressive harmonization of relevant policies and systems across the region. Thus, St. Kitts and Nevis is obligated to implement regionally developed regulations, such as legislation passed under OECS authority, unless specific concessions are sought.
The St. Kitts and Nevis Bureau of Standards develops, establishes, maintains, and promotes standards for improving industrial development, industrial efficiency, the health and safety of consumers, the environment, food and food products, and the facilitation of trade. It also conducts national training and consultations in international standards practices. As a signatory to the World Trade Organization (WTO) Agreement on the Technical Barriers to Trade, St. Kitts and Nevis, through the St. Kitts and Nevis Bureau of Standards, is obligated to harmonize all national standards to international norms to avoid creating technical barriers to trade.
St. Kitts and Nevis ratified the WTO Trade Facilitation Agreement (TFA) in 2016. Ratification of the Agreement is an important signal to investors of the country’s commitment to improving its business environment for trade. The TFA aims to improve the speed and efficiency of border procedures, facilitate reductions in trade costs, and enhance participation in the global value chain. St. Kitts and Nevis has already implemented some TFA requirements. A full list is available at: https://www.tfadatabase.org/members/saint-kitts-and-nevis/measure-breakdown. St. Kitts and Nevis ranks 71st out of 190 countries in trading across borders in the World Bank’s 2020 Doing Business Report.
Legal System and Judicial Independence
St. Kitts and Nevis bases its legal system on the British common law system. The Attorney General, the Chief Justice of the Eastern Caribbean Supreme Court (ECSC), junior judges, and magistrates administer justice in the country. The Eastern Caribbean Supreme Court Act establishes the Supreme Court of Judicature, which consists of the High Court and the Eastern Caribbean Court of Appeal. The High Court hears criminal and civil matters and makes determinations on interpretation of the Constitution. Parties may appeal to the ECSC, an itinerant court that hears appeals from all OECS members. Final appeal is to the Judicial Committee of the Privy Council of the UK.
The Caribbean Court of Justice (CCJ) is the regional judicial tribunal. The CCJ has original jurisdiction to interpret and apply the Revised Treaty of Chaguaramas. In its appellate jurisdiction, the CCJ considers and determines appeals from CARICOM member states, which are parties to the Agreement Establishing the Caribbean Court of Justice. Currently, St. Kitts and Nevis is subject only to the original jurisdiction of the CCJ.
The United States and St. Kitts and Nevis are both parties to the WTO. The WTO Dispute Settlement Panel and Appellate Body resolve disputes over WTO agreements, while courts of appropriate jurisdiction in both countries resolve private disputes.
Laws and Regulations on Foreign Direct Investment
St. Kitts and Nevis’ policy is to attract foreign direct investment into the priority sectors identified under its National Diversification Strategy. These include financial services, tourism, real estate, agriculture, information technology, education services, and limited light manufacturing. However, investment opportunities also exist in renewable energy and other services. The main laws concerning foreign investment include the Fiscal Incentive Act, the Hotels Aid Act, and the Companies Act.
Under St. Kitts and Nevis’ citizenship by investment (CBI) program, foreign individuals can obtain citizenship without needing to establish residence (or gaining voting rights). Applicants are required to undergo a due diligence process before citizenship can be granted. A minimum investment for a single investor to qualify is $200,000 in real estate or a $150,000 contribution to the Sustainable Growth Fund. Applicants must also provide a full medical certificate and evidence of the source of funds. Applications for CBI status for real estate projects should be submitted to SKIPA for review and processing. Further information is available at: http://www.ciu.gov.kn/.
Competition and Anti-Trust Laws
Chapter 8 of the Revised Treaty of Chaguaramas outlines the competition policy applicable to CARICOM states. Member states are required to establish and maintain a national competition authority for implementing the rules of competition. CARICOM established a Caribbean Competition Commission to apply rules of competition regarding anti-competitive cross-border business conduct. CARICOM competition policy addresses anti-competitive business conduct such as agreements between enterprises, decisions by associations of enterprises, and concerted practices by enterprises that have as their object or effect the prevention, restriction, or distortion of competition within CARICOM, and actions by which an enterprise abuses its dominant position within CARICOM. St. Kitts and Nevis does not have domestic legislation regulating competition.
Expropriation and Compensation
St. Kitts and Nevis employs eminent domain laws which allow the government to expropriate private property. The government is required to compensate owners. There are also laws that permit the acquisition of private businesses, and the government claims such laws are constitutional. The concept of eminent domain and the expropriation of private property is typically governed by laws that require governments to adequately compensate owners of the expropriated property at the time of its expropriation or soon thereafter. In some cases, the procedure for compensation of owners favors the government valuation.
The U.S. Embassy in Bridgetown is aware of two separate and outstanding cases involving the seizure of private land by the government. In the first case, the previous government agreed to pay the U.S. citizen claimant in installments and completed the first two installments. According to certain parties to the dispute, the current government defaulted on two installments. Although a court in St. Kitts and Nevis ordered the government to complete the 2015 and 2016 installments, the government has yet to do so. The government claims another individual made a claim on the property, and that it must wait until a court rules on the other claim before completing payments to the U.S. citizen owner.
In the second case, in 2015, an American company signed an agreement with St. Kitts and Nevis to provide two million gallons of water. The government expropriated one of the company’s wells in November 2018 without compensation. In 2019, the government agreed to pay a $1 million settlement to the company and to deposit an additional $500,000 into an escrow account. The company subsequently agreed to a settlement of $750,000 plus the escrow deposit. Although the government agreed to the payments, the Ministry of Infrastructure has not released the funds. The U.S. Embassy in Bridgetown recommends caution when conducting business in St. Kitts and Nevis.
ICSID Convention and New York Convention
St. Kitts and Nevis is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. It is not a member of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Arbitration Convention. However, as a member of the Organization of American States (OAS), St. Kitts and Nevis adheres to the New York Arbitration Convention. The Arbitration Act is the main legislation that governs arbitration in St. Kitts and Nevis.
Investor-State Dispute Settlement
Investors are permitted to use national or international arbitration for contracts with the state. St. Kitts and Nevis does not have a bilateral investment treaty or a free trade agreement with an investment chapter with the United States.
The country ranks 49th out of 190 countries in enforcing contracts in the 2020 World Bank Doing Business Report. According to the report, dispute resolution in St. Kitts and Nevis generally took an average of 578 days with a cost of 26.6 percent of the claim. The slow court system and bureaucracy are widely seen by foreign investors as main hindrances to timely resolution of commercial disputes. Through the Arbitration Act, the local courts recognize and enforce foreign arbitral awards issued against the government.
International Commercial Arbitration and Foreign Courts
The Eastern Caribbean Supreme Court (ECSC) is the domestic arbitration body. Local courts recognize and enforce foreign commercial arbitral awards. International commercial arbitration in St. Kitts and Nevis is applied under the Arbitration Act. The ECSC’s Court of Appeal also provides mediation.
St. Kitts and Nevis has a bankruptcy framework that grants certain rights to debtor and creditor. The 2020 Doing Business Report ranks St. Kitts and Nevis 168th of 190 countries in resolving insolvency.
4. Industrial Policies
To increase investment in the country, the government of St. Kitts and Nevis implemented a series of investment incentives codified in the Fiscal Incentives Act. The Fiscal Incentives Act includes a tax holiday of up to 15 years; additional tax rebates of up to five years; exemption from customs duties on material and equipment deemed necessary to establish or update an enterprise; repatriation of profits, dividends, royalties, and imported capital by arrangement with the Ministry of Finance; and protection of investment through government agreement. 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 St. Kitts and Nevis. The Fiscal Incentives Act (Amendment) Bill, 2019, amended the definition of the fourth type, known as enclave industry. Enclave enterprises are now permitted to sell goods within the CARICOM region and in the local market, in addition to exporting these goods.
Maximum Tax Holiday
At least 50 percent or more
At least 25 percent but less than 50 percent
At least 10 percent but less than 25 percent
Companies that qualify for tax holidays may import duty-free all equipment, machinery, spare parts, and raw materials used in production.
The Hotels Aid Act provides relief from customs duties on items brought into the country for use in the construction, extension, and equipping of a hotel of not less than ten bedrooms. In addition, the Income Tax Act provides special tax relief benefits for hotels of more than 30 bedrooms. These hotels are exempt from income tax for ten years. If the hotel contains fewer than 30 bedrooms, gains or profits are exempt from income tax for five years.
Value Added Tax is levied on the total accommodation charges of a hotel or guest house and on the cost of food and beverages sold by a restaurant. This total tax rate is ten percent.
Investors in St. Kitts and Nevis do not pay a capital gains tax. Qualified companies enjoy full exemption from taxes on corporate profits for a period not exceeding 15 years. Corporate tax does not apply to exempt companies or to enterprises that were granted tax concessions. There is no personal income tax. Additional tax concessions are available at the end of the tax holiday period.
Normally, individuals and ordinary companies remitting payments to parties outside St. Kitts and Nevis must deduct ten percent withholding tax from profits, administration, management or head office expenses, technical services fees, accounting and audit expenses, royalties, non-life insurance premiums, and rent. However, this tax does not apply to profits of an approved enterprise such as exempt trusts, limited partnerships, companies, or foundations.
The Unincorporated Business Tax Act mandates a levy on the gross revenue of services provided by professionals such as doctors, lawyers, dentists, and other specified persons listed in the schedule at a rate of four percent.
The government of St. Kitts and Nevis does not issue guarantees or jointly finance foreign direct investment projects.
Foreign Trade Zones/Free Ports/Trade Facilitation
There are no foreign trade zones or free ports in St. Kitts and Nevis. However, there are four fully developed industrial sites where production facilities can be constructed to specifications and leased at nominal rates. The Development Bank of St. Kitts and Nevis manages and services the sites on behalf of the government.
Performance and Data Localization Requirements
St. Kitts and Nevis does not mandate local employment. The provisions of the Labor Code outline the requirements for acquiring a work permit and prohibit anyone who is not a citizen of St. Kitts and Nevis or the OECS from engaging in employment without a work permit. When St. Kitts and Nevis grants work permits to senior management because no qualified nationals are available for the post, the government may recommend a counterparty trainee who is a citizen. There are no excessively onerous visa, residency, or work permit requirements.
As a member of the WTO, St. Kitts and Nevis is party to the Agreement to the Trade Related Investment Measures. While there are no formal performance requirements, the government encourages investments that will create jobs and increase exports and foreign exchange earnings. There are no requirements for participation either by nationals or by the government in foreign investment projects. There is no requirement that enterprises must purchase a fixed percentage of goods or technology from local sources, but the government encourages local sourcing. Foreign investors may hold up to 100 percent of an investment. Except for the requirement to obtain an Alien Landholders License, foreign investment in St. Kitts and Nevis is not subject to any restrictions, and foreign investors receive national treatment. There are no requirements for foreign information technology providers to turn over source code and/or provide access to surveillance. There are no measures or draft measures that prevent or restrict companies from freely transmitting customer or other business-related data outside the country.
5. Protection of Property Rights
Civil law protects physical property and mortgage claims. Foreign investors are required to obtain an Alien Landholders License to purchase residential or commercial property. The cost of these licenses is ten percent of the value of the land, plus fees associated with an attorney or other local service provider. Cabinet grants these licenses. Foreign investors are not required to pay the Alien Landholders License Tax in areas designated as special development zones, such as Frigate Bay or certain parts of the South East Peninsula. The Land Registry Act of 2017 was enacted to modernize records, identify property owners, and register clear land titles.
St. Kitts and Nevis ranks 185th of 190 countries in registering property in the World Bank’s 2020 Doing Business Report.
Intellectual Property Rights
St. Kitts and Nevis has a legislative framework supporting its commitment to the protection of intellectual property rights (IPR). While the legal structures governing IPR are adequate, enforcement is inconsistent. The Intellectual Property Office of St. Kitts and Nevis (IPOSKN) is responsible for administering all laws related to IPR and overseeing the registration of patents, trademarks, and service marks. Its website is https://ipo.gov.kn.
St. Kitts and Nevis is signatory to the Paris Convention for the Protection of Industrial Property, the Patent Cooperation Treaty, and the Berne Convention for the Protection of Literary and Artistic Works. It is also a member of the UN World Intellectual Property Organization (WIPO).
Article 66 of the Revised Treaty of Chaguaramas establishing the CSME commits all 15 members to implement IPR protection and enforcement. The CARIFORUM-EU EPA contains the most detailed obligations regarding IPR in any trade agreement to which St. Kitts and Nevis is party. The CARIFORUM-EU EPA recognizes to the protection and enforcement of IPR. Article 139 of the CARIFORUM-EU EPA requires parties to “ensure an adequate and effective implementation of the international treaties dealing with intellectual property to which they are parties and of the [WTO] Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).”
The Customs Department of St. Kitts and Nevis can seize prohibited or counterfeit goods. However, the courts rule on the forfeiture and disposal of such goods. Complainants arrange with Customs to secure the goods until a judgment is rendered. St. Kitts and Nevis is in the process of reviewing its existing laws in relation to the importation of counterfeit and prohibited goods.
St. Kitts and Nevis is not included in the United States Trade Representative (USTR) 2021 Special 301 Report or USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy.
For additional information about treaty obligations and points of contact at local intellectual property offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .
6. Financial Sector
Capital Markets and Portfolio Investment
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 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. St. Kitts and Nevis is open to portfolio investment.
St. Kitts and Nevis 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. 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.
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. 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 on March 31, 2021 in four pilot countries including St. Kitts and Nevis. The DCash pilot phase will run for 12 months. The digital Eastern Caribbean currency will 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.
Foreign Exchange and Remittances
St. Kitts and Nevis is a member of the ECCU and the ECCB. The currency of exchange is the Eastern Caribbean Dollar (XCD). As a member of the OECS, St. Kitts and Nevis has a fully liberalized foreign exchange system. The XCD was pegged to the United States dollar at a rate of 2.70 Eastern Caribbean dollars to $1.00 in 1976. As a result, the XCD does not fluctuate, creating a stable currency environment for trade and investment in St. Kitts and Nevis.
Companies registered in St. Kitts and Nevis 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. A mixed foreign-domestic company may repatriate profits to the extent of its foreign participation.
As a member of the OECS, there are no exchange controls in St. Kitts and Nevis and the invoicing of foreign trade transactions are allowed in any currency. Importers are not required to make prior deposits in local funds and export proceeds do not have to be surrendered to government authorities or to authorized banks. There are no controls on transfers of funds. St. Kitts and Nevis is a member of the Caribbean Financial Action Task Force (CFATF).
The country passed the Anti-Money Laundering Bill, 2019. The stated intent of this bill is to begin to bring the country into alignment with international standards for combating money laundering. St. Kitts and Nevis also passed the Proceeds of Crime and Asset Recovery Bill, 2019, which aims to provide the government with an additional tool to combat money laundering and terrorist financing.
In 2016, the government signed an Intergovernmental Agreement in observance of FATCA, making it mandatory for banks in St. Kitts and Nevis to report the banking information of U.S. citizens.
Sovereign Wealth Funds
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.
7. State-Owned Enterprises
State-owned enterprises (SOEs) in St. Kitts and Nevis work in partnership with ministries, or under their remit to carry out certain specific ministerial responsibilities. There are currently about ten SOEs in St. Kitts and Nevis in areas such as tourism, investment services, broadcasting and media, solid waste management, and agriculture. They are all wholly owned government entities. Each is headed by a board of directors to which senior managers report. A list of SOEs can be found at http://www.gov.kn.
St. Kitts and Nevis does not currently have a targeted privatization program.
8. Responsible Business Conduct
The private sector is involved in projects that benefit society, including support of environmental, social, and cultural causes. The government encourages corporate social responsibility, but does not have regulations in place to mandate such activities by private companies.
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.
Resources to Report Corruption
Church Street, Basseterre, St. Kitts and Nevis
10. Political and Security Environment
St. Kitts and Nevis does not have a recent history of politically motivated violence or civil disturbance. The government constantly reviews mandatory protocols and measures related to the COVID-19 pandemic. St. Kitts and Nevis’ general elections are constitutionally due in 2025.
11. Labor Policies and Practices
St. Kitts and Nevis has a labor force of about 25,000 with a literacy rate of 98 percent. Local colleges largely meet the country’s technical and training needs. There is also a large pool of professionals to draw from in fields such as law, medicine, information technology, and accounting. Many of the professionals in St. Kitts and Nevis trained in the United States, Canada, the wider Caribbean, or the UK, and often also gain work experience before returning to St. Kitts and Nevis.
The government set the minimum wage at $3.31 an hour. The law provides for a 40-hour workweek and for premium pay for work above the standard workweek. There is no legal prohibition on excessive or compulsory overtime. Although not required by law, workers generally received at least one 24-hour rest period per week. The law also calls for paid holidays and work on rest days to be paid at double the standard rate, as well as equal pay for equal work.
Although there is no legislation governing the organization and representation of workers, the constitution speaks to the freedom of association and the right to organize and collective bargaining. St. Kitts and Nevis ratified the International Labor Organization (ILO) Conventions on freedom of association and and the right to organize and collective bargaining. The law permits the police, civil servants, hotel workers, construction workers, and employees of small businesses to organize staff associations. Staff associations do not have bargaining powers but are used to network and develop professional standards.
Labor unions are free to organize and to negotiate for better wages and benefits for union members. A union representing more than fifty percent of the employees at a company may apply for the company to recognize the union for collective bargaining. Companies generally recognize the establishment of a union if the majority of its workers voted in favor of organizing the union, but the companies are not legally obligated to do so. Collective bargaining takes place on a workplace-by-workplace basis and is not industry-wide.
In practice, but not by law, there are restrictions on strikes by workers who provide essential services, such as the police and civil servants. The law prohibits anti-union discrimination but does not require employers found guilty of such action to rehire employees who were fired for union activities. However, the employer must pay lost wages and severance pay. The ILO Committee of Experts reported in 2015 that workers are not protected against antiunion discrimination during recruitment or on the job. The ILO provided technical assistance to the government in labor law reform, labor administration, employment services, labor inspection, and occupational safety and health.
The Labor Commissioner mediates all types of disputes between labor and management. By law, the system of industrial relations in St. Kitts and Nevis allows for labor grievances through a process of conciliation and mediation by the Department of Labor and the Commissioner, an independent hearing, arbitration, and finally a court of law. In practice, however, few disputes go to the Commissioner for resolution. If neither the Commissioner nor the Ministry of Labor can resolve the dispute, the law allows a case to be brought before a civil court.
The law does not provide remedies for labor law violations, and the Ministry of Labour does not provide information on the adequacy of resources, inspections, and penalties for violations. Penalties are outdated and fines are insufficient to deter violations. The Department of Labour provided employers with training on their rights and responsibilities.
Investors in St. Kitts and Nevis are responsible for maintaining workers’ rights and safeguarding the environment. While there are no specific health and safety regulations, the Factories Act provides general health and safety guidance to Labor Ministry inspectors. The Labor Commission settles disputes over safety conditions. Workers have the right to report unsafe work environments without jeopardy to continued employment, and workers may leave such locations without jeopardy to their continued employment.
12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
As the development bank of the United States, the Development Finance Corporation (DFC) partners with the private sector to finance solutions in developing countries to drive economic growth, create stability, and improve livelihoods. St. Kitts and Nevis was a qualifying country for the DFC’s predecessor agency, the Overseas Private Investment Corporation. However, as a high-income country, it is not eligible for DFC programs.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source*
USG or international statistical source
USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Host Country Gross Domestic Product (GDP) ($M USD)