2021 Investment Climate Statements: Saint Vincent and the Grenadines
St. Vincent and the Grenadines is a member of the Organization of Eastern Caribbean States (OECS) and the Eastern Caribbean Currency Union (ECCU). According to Eastern Caribbean Central Bank (ECCB) statistics, St. Vincent and the Grenadine’s 2020 estimated gross domestic product (GDP) was 783 million USD (2.12 billion Eastern Caribbean dollars) in 2020. This represents an estimated 7 percent reduction from 2019, following several consecutive years of minimal growth. St. Vincent and the Grenadines, like other Eastern Caribbean countries, is highly dependent on tourism, which accounted for 28.6 percent of GDP and 19.9 percent of formal sector employment in 2019. The anticipated recovery from the pandemic-induced downturn is expected to fall significantly short of expectations, contributing to a challenging economic outlook for 2021. Short-term forecasts project a sluggish recovery throughout 2021 and a return to pre-pandemic levels of growth and tourism by 2024. The economy might struggle to hit its forecasted growth of around 3.7 percent in 2021, and in fact may continue to contract as the tourism sector is impacted by the ongoing pandemic.
Unanticipated spending on health care, extended welfare and unemployment benefits, and economic stimulus initiatives, coupled with a sharp drop in government revenues in 2020, forced the government to borrow to finance a widening fiscal deficit. This new borrowing is primarily from international financial institutions on concessional terms.
The country seeks to diversify its economy across several niche markets, particularly tourism, international financial services, agroprocessing, light manufacturing, renewable energy, creative industries, and information and communication technologies. St. Vincent and the Grenadines ranked 130th out of 190 countries in the World Bank’s 2020 Doing Business report.
The government of St. Vincent and the Grenadines strongly encourages foreign direct investment (FDI), particularly in industries that create jobs and earn foreign exchange. Through the Invest St. Vincent and the Grenadines Authority (Invest SVG), the government facilitates FDI and maintains an open dialogue with current and potential investors.
The government does not impose limits on foreign control, nor are there requirements for local ownership or ownership in locally registered companies. The island’s legal system is based on the British common law system.
St. Vincent and the Grenadines does not have a bilateral investment treaty with the United States. It has double-taxation treaties with the United States, Canada, the UK, Denmark, Norway, Sweden, and Switzerland.
In 2016, St. Vincent and the Grenadines signed an intergovernmental agreement in observance of the United States’ Foreign Account Tax Compliance Act (FATCA), making it mandatory for banks in St. Vincent and the Grenadines to report the banking information of U.S. citizens.
The government of St. Vincent and the Grenadines, through Invest SVG, strongly encourages FDI, particularly in industries that create jobs and earn foreign currency. The government is open to all investment, but is currently prioritizing investment in niche markets, particularly tourism, international financial services, agroprocessing, light manufacturing, creative industries, and information and communication technologies.
Invest SVG’s FDI policy is designed to attract investment into priority sectors. It advises the government on the formation and implementation of policies and programs that attract and facilitate investment. The government offers special incentive packages for foreign investments in the hotel industry and light manufacturing. The government offers other incentive packages on an ad hoc basis.
Limits on Foreign Control and Right to Private Ownership and Establishment
There are no limits on foreign control in St. Vincent and the Grenadines, nor are there requirements for local investment or ownership in locally registered companies, although non-nationals must apply for a license from the Prime Minister’s Office to acquire more than 50 percent of a company. An attorney must submit the application and Cabinet must approve it. Companies holding at least five acres of land may restrict or prohibit the issue or transfer of their shares or debentures to non-nationals.
The government has not officially closed any industries to private investment, although some activities such as telecommunications, utilities, broadcasting, banking, and insurance require a government license.
Other Investment Policy Reviews
St. Vincent and the Grenadines is a member of the OECS. The OECS has not conducted a trade policy review in the last three years.
Invest SVG facilitates domestic and foreign direct investment in priority sectors and advises the government on the formation and implementation of policies and programs to attract investment. Invest SVG provides business support services and market intelligence to all investors. It also reviews all investment projects applying for government incentives to ensure they conform to national interests and provide economic benefits to the country. Its website is http://www.investsvg.com. In addition to its website, the country offers an online guide that is useful for navigating the laws, rules, procedures, and registration requirements for foreign investors. The guide is available at http://theiguides.org/public-docs/guides/saintvincentandthegrenadines.
According to the World Bank’s 2020 Doing Business Report, St. Vincent and the Grenadines ranked 93rd of 190 countries in the ease of starting a business, which takes seven procedures and ten days to complete. The general practice is to retain an attorney to prepare all incorporation documents. A business must register with the Commerce and Intellectual Property Office (CIPO), the Ministry of Trade, the Inland Revenue Department, and the National Insurance Service. The CIPO has an online information portal that describes the steps to register a business in St. Vincent and the Grenadines. There is no online registration process, but the required forms are available online. These must be printed and submitted to the CIPO. More information is available at http://www.cipo.gov.vc.
There is no restriction on domestic investors seeking to do business abroad. Local companies are actively encouraged to take advantage of export opportunities specifically related to the country’s membership in the OECS Economic Union and the Caribbean Single Market and Economy (CSME), which enhances the competitiveness of the local and regional private sectors across traditional and emerging high-potential markets.
St. Vincent and the Grenadines has not signed a bilateral investment treaty with the United States. The country, however, has bilateral tax treaties with the United States, Canada, the UK, Denmark, Norway, Sweden, and Switzerland. In1989, Germany and St. Vincent and the Grenadines signed a treaty for the Encouragement and Reciprocal Protection of Investment. In 2018, St. Vincent and the Grenadines and the UAE concluded an Agreement on the Avoidance of Double Taxation on Income and an Agreement for the Promotion and Protection of Investments. St. Vincent and the Grenadines is also party to the following economic communities and organizations:
The Treaty of Chaguaramas established the Caribbean Community (CARICOM) in 1973. Its purpose is to promote economic integration among its 15 member states. Investors operating in St. Vincent and the Grenadines have preferential access to the entire CARICOM market. The Revised Treaty of Chaguaramas (RTC) established the CSME, which permits the free movement of goods, capital, and labor among CARICOM states. CARICOM has bilateral agreements with Cuba, Colombia, Costa Rica, the Dominican Republic, and Venezuela. In 2013, CARICOM entered into a Trade and Investment Framework Agreement with the United States.
Organization of Eastern Caribbean States
The Revised Treaty of Basseterre established the OECS. The OECS consists of seven full member states (Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines), and four associate members (Anguilla, Guadeloupe, Martinique, and the British Virgin Islands). The OECS promotes harmonization among member states in foreign policy, defense and security, and economic affairs. The six independent countries and Montserrat (a British Overseas Territory) ratified the Revised Treaty of Basseterre establishing the OECS Economic Union, which entered into force 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.
CARIFORUM-EU Economic Partnership Agreement
The Caribbean Forum of African, Caribbean and Pacific States (CARIFORUM) and the European Community signed an Economic Partnership Agreement (EPA) in 2008. The overarching objectives of the EPA are to alleviate poverty, promote regional integration and economic cooperation, and foster the gradual integration of the CARIFORUM states into the world economy by improving trade capacity and creating an investment-conducive environment. The EPA promotes trade-related developments in areas such as competition, intellectual property, public procurement, the environment, and the protection of personal data.
Caribbean Basin Initiative
The Caribbean Basin Initiative facilitates the economic development and export diversification of the Caribbean Basin economies. It promotes economic development through private sector initiatives in Central America and the Caribbean by expanding foreign and domestic investment in non-traditional sectors, diversifying country economies, and expanding their imports. The Caribbean Basin Initiative provides beneficiary countries with duty-free access to the U.S. market for most goods. It permits duty-free entry of products manufactured or assembled in St. Vincent and the Grenadines into the United States.
Caribbean/Canada Trade Agreement (CARIBCAN)
CARIBCAN is an economic and trade development assistance program for Commonwealth Caribbean countries in which Canada provides duty-free access to its national market for most products originating in Commonwealth Caribbean countries.
St. Vincent and the Grenadines uses transparent policies and laws to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety. Accounting, legal, and regulatory practices are generally transparent and consistent with international norms. The International Financial Accounting Standards, which stem from the General Accepted Accounting Principles, govern the profession in St. Vincent and the Grenadines.
Rulemaking and regulatory authority rests in the unicameral House of Assembly, which has fifteen elected members and six appointed senators who sit for a five-year term. The Public Accounts Committee and Director of Audits ensure the government follows administrative processes.
National laws govern all regulations relating to foreign investment. Ministries develop these laws, and the Ministry of Legal Affairs drafts them. Laws pertaining to Invest SVG also govern FDI. Invest SVG has the main responsibility for investment supervision, while the Ministry of Economic Planning, Sustainable Development, Industry, Information and Labor tracks investments to collect information for national statistics and reporting purposes.
The government publishes most draft bills in local newspapers for public comment. In addition, the government circulates bills at stakeholder meetings. Some bills and laws are published on the government website at www.gov.vc. The government sometimes establishes a select committee to suggest amendments to specific draft bills. In some instances, these mechanisms may also apply to investment laws and regulations. There is no obligation for the government to consider proposed amendments prior to implementation. The government discloses information on public finances and debt obligations. The annual budget address can be found online.
The country’s membership in regional organizations, particularly the OECS and its Economic Union, commits the state to implement all appropriate measures to fulfill 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 most recent Caribbean Financial Action Task Force (CFATF) Mutual Evaluation assessment found St. Vincent and the Grenadines to be largely compliant. The ECCB is the supervisory authority over financial institutions registered under the Banking Act of 2015.
An external company must be registered with the Commercial Registry in St. Vincent and the Grenadines if it wishes to operate in the country. Companies using or manufacturing chemicals must first obtain approval of their environmental and health practices from the St. Vincent and the Grenadines National Standards Institution and the Environmental Division of the Ministry of Health.
International Regulatory Considerations
As a member of the OECS and the ECCU, St. Vincent and the Grenadines 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, the country must implement regionally developed regulations, such as legislation passed under the OECS Authority, unless it seeks specific concessions not to do so.
The country’s Bureau of Standards is a statutory body which prepares and promulgates standards in relation to goods, services, processes, and practices. As a signatory to the WTO Agreement on the Technical Barriers to Trade, St. Vincent and the Grenadines must harmonize all national standards to international norms to avoid creating technical barriers to trade.
St. Vincent and the Grenadines ratified the WTO Trade Facilitation Agreement (TFA) in 2017 and subsequently notified its Category A measures. Included in the Trade Facilitation Agreement are measures to improve risk management techniques and a post-clearance audit system to eliminate delays and congestion at the port. While St. Vincent and the Grenadines has implemented some TFA requirements, it has missed two implementation deadlines. A full list of measures undertaken pursuant to the TFA is available at https://tfadatabase.org/members/saint-vincent-and-the-grenadines.
Legal System and Judicial Independence
The country’s legal system is based on the British common law system. The constitution guarantees the independence of the judiciary. The judicial system consists of lower courts, called magistrates’ courts, and a family court. 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 (commercial) matters and makes determinations on constitutional matters. Parties may appeal first to the Eastern Caribbean Supreme Court, an itinerant court that hears appeals from all OECS members. The final court of appeal is the Judicial Committee of the UK Privy Council.
The country has a strong judicial system that upholds the sanctity of contracts and prevents unwarranted discrimination towards foreign investors. The government treats foreign investors and local investors equally with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory. The police and court systems are generally unbiased in commercial matters.
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. St. Vincent and the Grenadines is only subject to the original jurisdiction of the CCJ.
The United States and St. Vincent and the Grenadines 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
Invest SVG provides guidance on the relevant laws, rules, procedures, and reporting requirements for investors. Invest SVG has the authority to screen and review FDI projects. The review process is transparent and contingent on the size of capital investment and the project’s projected economic impact. The investor must complete a series of steps to obtain a business license. These steps are listed at http://www.investsvg.com. All potential investors seeking an incentive package must submit their proposals for review by Invest SVG to ensure the project is consistent with the nation’s laws and interests and would provide economic benefits to the country.
Local enterprises generally welcome joint ventures with foreign investors to access technology, expertise, markets, and capital.
Competition and Antitrust 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 the Community, and actions by which an enterprise abuses its dominant position within the Community. There is no legislation to regulate competition in St. Vincent and the Grenadines.
Expropriation and Compensation
Under the Land Acquisition Act, the government may acquire land for a public purpose. The government must serve a notice of acquisition on the person from whom the land is acquired. A Board of Assessment determines compensation and files its award in the High Court. The value of the land is based on the amount for which the land would be sold on the open market by a willing seller. Under the Alien’s (Land-Holding Regulation) Act, the government can hold properties forfeit without compensation if the terms of investment are not met. The U.S. Embassy is not aware of any outstanding expropriation claims or nationalization of foreign enterprises in St. Vincent and the Grenadines.
ICSID Convention and New York Convention
St. Vincent and the Grenadines is a member of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Arbitration Convention.
According to the World Bank’s 2020 Doing Business Report, dispute resolution generally took 595 days, though this may vary. The slow court system and bureaucracy are widely seen as the main hindrances to timely resolution of commercial disputes. St. Vincent and the Grenadines ranked 61st of 190 countries in enforcing contracts in the report. Through the Arbitration Act, the local courts recognize and enforce foreign arbitral awards issued against the government.
Investor-State Dispute Settlement
Investors are permitted to use national or international arbitration regarding contracts entered into with the state. St. Vincent and the Grenadines does not have a bilateral investment treaty or a free trade agreement with an investment chapter with the United States. The U.S. Embassy is not aware of any current investment disputes in the country.
International Commercial Arbitration and Foreign Courts
The Eastern Caribbean Supreme Court is the domestic arbitration body, and the local courts recognize and enforce foreign arbitral awards. The Trade Disputes (Arbitration and Inquiry) Act provides that either party to an existing trade dispute can report it to the Governor General. The Governor General may, if both parties consent, refer the dispute to an arbitration panel for settlement. The arbitration panel must issue an award that is consistent with national employment laws. Parties can be represented by legal counsel before the arbitration panel. These bodies may conduct proceedings in public or private. The Trade Disputes Act provides that alternative dispute mechanisms are available as a means for settling disputes between two private parties. The government recognizes voluntary mediation or conciliation as dispute resolution mechanisms. The Eastern Caribbean Supreme Court’s Court of Appeals also provides mediation.
The Bankruptcy and Insolvency Act governs the country’s bankruptcy framework and grants certain rights to debtors and creditors. The 2020 World Bank Doing Business Report ranks St. Vincent and the Grenadines 168th of 190 countries in resolving insolvency.
Through the Fiscal Incentives Act, St. Vincent and the Grenadines offers many incentives for investors and provides the necessary information on the laws, criteria, and application procedures to qualify for these incentives.
The list of incentives includes exemption from or reduction of duty payments on the importation or purchase of materials and other equipment for use in construction and operation of the business. Other incentives are the exemption from or a reduction of duty on the importation or purchase of vehicles for use in operation of the business, and a reduction of property tax of up to ten percent for land and buildings used in the operation of the business.
The government also provides tax holidays as an investment incentive. Group I enterprises (50 percent or more local value added) enjoy a 15-year tax holiday; Group II enterprises (25 to 49 percent local value added) are granted 12 years; Group III enterprises (10 to 24 percent local value added) receive ten years. Enclave enterprises (producing wholly for markets outside of CARICOM) enjoy a 15-year tax holiday. The Industry Unit under the Ministry of Finance, Economic Planning, Sustainable Development and Information Technology administers this Act. These fiscal incentives may be granted to manufacturing and processing companies producing “Approved Products.” Companies must apply to Cabinet to become “Approved Enterprises” producing such products. Local value is determined by the percentage of annual sales not contributed by imported materials and services, non-Caribbean Community (CARICOM) national labor, profits and other income payments distributed to members outside of CARICOM, and depreciation on imported machinery and equipment. Tax holidays are also granted to capital-intensive industries investing at least 9.25 million USD (25 million Eastern Caribbean dollars).
Companies must meet export performance requirements to take advantage of certain tax incentives. For example, enclave enterprises must produce goods exclusively for export outside the CARICOM region. Foreign investors may finance investments using domestic or foreign capital sources. The Fiscal Incentives Act confers income tax credits in the form of export allowance to qualifying enterprises for the export of approved products.
In the tourism sector, the Hotels Aid Act provides incentives for the renovation, refurbishment, and expansion of existing hotels and for the construction of new hotels. Concessions for expansions of not less than five guest rooms are also available. The Ministry of Tourism administers the Act.
The corporate tax rate ranges from 15 to 30 percent, except for companies granted tax holidays under the Fiscal Incentives Act. Companies manufacturing goods for local or export markets and which have maintained a special account conforming to Comptroller of Inland Revenue requirements have access to reduced tax rates. Offshore businesses are also subject to value added tax (VAT) on taxable goods imported into St. Vincent and the Grenadines. VAT is 16 percent. An international company may import machinery and equipment free from certain taxes and custom duties if the imports are capital goods to be used in a company’s business.
The government recognizes trusts if they are in writing and follow the formal requirements for a deed or settlement under the International Trust Act. The Act recognizes several types of international trusts: protective or spendthrift trusts, charitable trusts, and purpose trusts. A Registrar of Trusts has direct regulatory responsibilities relating to registration, certificate issuance, and review of trust documentation. At least one trustee must be registered and licensed for an international trust to be registered. The government confers certain benefits on registered trusts, including exemptions from various taxes and duties provided the settler was not insolvent at the time the trust was created or did not become insolvent because of the creation of the trust. The exemptions include income tax, excise tax, customs duties, and stamp duty exemptions. These are applicable if certain conditions are met, one of which being that the trust must not be domiciled in the country. The Comptroller of Inland Revenue is empowered to assess a trust’s eligibility for tax exemptions and may require the registered trustee to provide financial information.
If at least one beneficiary of a registered trust becomes a resident after the trust is registered, and if the trust is in good standing, the fact of the residency of the beneficiary will not invalidate the trust. Neither the trust nor its beneficiaries will be entitled to tax exemptions for any year during which trust had one or more resident beneficiaries. An international trust, except one that is an international company, will not become void or voidable due to a settler’s bankruptcy, insolvency, or liquidation, the law of the settler’s domicile or ordinary residence notwithstanding.
While there is no formal legislation in relation to incentives in the information and telecommunications sector, commercial presence and establishment is at the discretion of the Cabinet on advice from the National Telecommunications Regulatory Commission.
Foreign Trade Zones/Free Ports/Trade Facilitation
The Export Free Zones Act of 1999 provides for the designation or establishment of export free zones, which allow for the duty-free import of inputs for processing and export. While allowable under law, there are no foreign trade zones or free trade zones in St. Vincent and the Grenadines.
Performance and Data Localization Requirements
The government does not mandate local employment. The Employment of Foreign Nationals and Commonwealth Citizens Act provides foreign nationals or Commonwealth citizens must obtain valid work permits. The ministry responsible for national security oversees work permit applications. The government may modify or cancel work permits after a seven-day notice if the holder fails to comply with the conditions of the permit.
There is no requirement that enterprises purchase a fixed percentage of goods from local sources. There are no requirements for foreign information technology providers to turn over source code and/or provide access to surveillance (backdoors into hardware and software keys for encryption, etc.). The country has not adopted any specific data protection legislation.
The Aliens’ Land Holding Act regulates the holding of land and mortgages related to land by individuals who are non-nationals and companies controlled by non-nationals. Non-nationals must apply for and be granted a license to hold land. The breach of any condition of the license authorizes forfeiture to the government of the interest held by the non-national. License conditions may require that land be developed within a specific timeframe. Non-nationals apply for a license to hold the land to the office of the Prime Minister through an attorney licensed to practice in St. Vincent and the Grenadines. If approved, the non-national must file the license at the Registry of the High Court. The Registry collects all applicable registration fees and stamp duties. The World Bank’s 2020 Doing Business Report ranks St. Vincent and the Grenadines 168th out of 190 countries in ease of registering property. It takes about 47 days to complete the seven necessary procedures, at a cost of about 11.8 percent of the property value.
Intellectual Property Rights
St. Vincent and the Grenadines has a legislative framework protecting intellectual property rights (IPR). While legal structures governing IPR are adequate, enforcement measures are inconsistent. The administration of IPR laws is the responsibility of the Office of the Attorney General. The CIPO administers the registration of patents, trademarks, and service marks. St. Vincent and the Grenadines is signatory to the Paris Convention for the Protection of Industrial Property and the Berne Convention for the Protection of Literary and Artistic Works. It is also a member of the UN World Intellectual Property Organization and is a signatory to its treaties. St. Vincent and the Grenadines is not listed in the U.S. Trade Representative’s 2021 Special 301 Report or in its 2020 Review of Notorious Markets for Counterfeiting and Piracy.
Article 66 of the Revised Treaty of Chaguaramas establishing the CSME commits all 15 members to implement stronger intellectual property protection and enforcement. The EPA between the CARIFORUM states and the European Community contains the most detailed obligations in respect to intellectual property in any trade agreement to which St. Vincent and the Grenadines is a party. The EPA recognizes the protection and enforcement of intellectual property. Article 139 of the 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 Agreement on Trade Related Aspects of Intellectual Property (TRIPS).”
The Enforcement Division of the Customs and Excise Department spearheads the preventative and enforcement aspects of IPR protection, which includes the detention, seizure, and forfeiture of counterfeit goods. The Enforcement Division also conducts investigations of customs offenses and administers fines and penalties.
St. Vincent and the Grenadines is a member of the ECCU. As such, it is also a participant on the Eastern Caribbean Securities Exchange (ECSE) and the Regional Government Securities Market. The ECSE is a regional securities market established by the ECCB and regulated by the Eastern Caribbean Securities Regulatory Commission. The Securities Act of 2001 regulates activities on the ECSM.
The ECSE and its subsidiaries, the Eastern Caribbean Central Securities Depository and the Eastern Caribbean Central Securities Registry, facilitate activities on the ECSE. The main activities are the primary issuance and secondary trading of corporate and sovereign securities, the clearance and settlement of issues and trades, maintaining securities holders’ records, and providing custodial, registration, transfer agency, and paying agency services in respect of listed and non-listed securities. As of March 31, 2020, there were 154 securities listed on the ECSE, comprising 134 sovereign debt instruments, 13 equities, and seven corporate bonds. Market capitalization stood at 666 million USD (1.8 billion Eastern Caribbean dollars), representing a 0.3 percent decrease from the previous year. St. Vincent and the Grenadines is open to portfolio investment.
St. Vincent and the Grenadines 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 international payments and transfers. St. Vincent and the Grenadines does not have a credit bureau.
Money and Banking System
Eight participating governments 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. Vincent and the Grenadines is a signatory to this agreement. Therefore, the ECCB controls the country’s currency and regulates its domestic banks.
The Banking Act 2015 is a harmonized piece of legislation across all ECCU member states. The ECCB and the Ministers of Finance of member states jointly carry out banking supervision under the Act. The Ministers of Finance usually act in consultation with the ECCB with respect to those areas of responsibility within the Minister of Finance’s portfolio.
Domestic and foreign banks can establish operations in St. Vincent and the Grenadines. The Banking Act requires all commercial banks and other institutions to be licensed. The ECCB regulates financial institutions. As part of 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 St. Vincent and the Grenadines as stable. Assets of commercial banks totaled $833 million (2.25 billion Eastern Caribbean dollars) at the end of December 2019 and remained relatively consistent during the previous year. The reserve requirement for commercial banks was six percent of deposit liabilities.
The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S., Canadian, and European banks due to risk management concerns. CARICOM remains committed to engaging with key stakeholders on the issue and appointed a Committee of Ministers of Finance on Correspondent Banking to continue to monitor the issue.
Bitt, a Barbadian company, developed digital currency DCash in partnership with ECCB. The first successful DCash retail central bank digital currency (CDBC) consumer-to-merchant transaction took place in Grenada in February following a multi-year development process. The CBB and the FSC established a regulatory sandbox in 2018 where financial technology entities can do live testing of their products and services. This allowed regulators to gain a better understanding of the product or service and to determine what, if any, regulation is necessary to protect consumers. Bitt completed its participation and formally exited the sandbox in 2019. Bitt is expected to launch DCash in St. Vincent and the Grenadines in mid-2021. St. Vincent and the Grenadines does not have any specific legislation to regulate cryptocurrencies.
Foreign Exchange and Remittances
St. Vincent and the Grenadines 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, its foreign exchange system is fully liberalized. The XCD has been pegged to the U.S. dollar at a rate of XCD 2.70 to USD 1.00 since 1976. As a result, the Eastern Caribbean dollar does not fluctuate, creating a stable currency environment for trade and investment.
Companies registered in St. Vincent and the Grenadines have the right to repatriate all capital, royalties, dividends, and profits free of all taxes or any other charges on foreign exchange transactions. International companies are exempt from taxation. Under present regulations, there are no personal income taxes, estate taxes, corporate income taxes, or withholding taxes for international companies operating in St. Vincent and the Grenadines. International companies are also exempt from competitive tax for 25 years.
Only banks may make currency conversions. St. Vincent and the Grenadines is a member of the CFATF.
In 2014, the government of St. Vincent and the Grenadines signed an intergovernmental agreement with the United States to facilitate compliance for FATCA, which makes it mandatory for St. Vincent and the Grenadines’ banks to report the banking information of U.S. citizens.
Sovereign Wealth Funds
Neither the government of St. Vincent and the Grenadines, nor the ECCB, maintains a sovereign wealth fund.
There are currently 28 state-owned enterprises (SOEs) operating in the following sectors: water, transportation, housing, transportation (ports), electricity, tourism, information and communication, telecommunications, investment and investment services, financial services, fisheries, agriculture, sports and culture, civil engineering, and infrastructure.
SOEs in St. Vincent and the Grenadines are wholly owned government entities. They are headed by boards of directors to which senior managers report. They are governed by their respective legislation and do not generally pose a threat to investors, as they are not designed for competition. There is no single published list of SOEs, though information about individual SOEs is available.
There are no targeted privatization programs in St. Vincent and the Grenadines.
The government and the public view responsible business conduct positively. The private sector is involved in projects that benefit society, including in support of environmental, social, and cultural causes. Individuals benefit from business-sponsored initiatives when employees of local and foreign-owned enterprises volunteer and when companies make monetary or in-kind donations to local causes.
The NGO community, while comparatively small, is involved in fundraising and volunteerism in gender, health, environmental, and community projects. The government sometimes partners with NGOs and generally encourages philanthropy.
There are no alleged or reported human or labor rights concerns relating to responsible business conduct of which foreign businesses should be aware.
St. Vincent and the Grenadines is not a signatory of the Montreux Document on Private Military and Security Companies or a participant in the International Code of Conduct for Private Security Service Providers’ Association.
The law provides criminal penalties for official corruption, and the government generally implements these laws. St. Vincent and the Grenadines is a signatory to the Inter-American Convention Against Corruption, but not to the UN Anti-Corruption Convention.
The Director of Public Prosecutions has the authority to prosecute a number of corruption-related offenses. Corruption allegations are investigated by the Royal St. Vincent and the Grenadines Police Force. There is generally no statutory standard obligation for public officers to disclose financial information to a specific authority. If there are confiscation proceedings initiated or contemplated against a corrupt official, the courts can order disclosure of financial information. The Financial Intelligence Unit has the authority to conduct financial investigations with a court order.
The law also provides for public access to information. Only a narrow list of exceptions outlining the grounds for nondisclosure exists, but there is no specific timeline for relevant authorities to make the requested response or disclosure. There are no criminal or administrative sanctions for not providing a response and there is no appeal mechanism for review of a disclosure denial.
Resources to Report Corruption
Director of Public Prosecutions
Office of Public Prosecutions
Frenches Gate, Kingstown
Commissioner of Police
Royal St. Vincent and the Grenadines Police Force
St. Vincent and the Grenadines does not have a recent history of politically-motivated violence or civil disturbance. Elections are peaceful and regarded as being free and fair. The next general elections are constitutionally due in 2025.
St. Vincent and the Grenadines’ active 2020 labor force was approximately 55,567 persons. The government generally enforces labor laws, and penalties are sufficient to deter violations. The law, including related regulations and statutory instruments, provides for the rights of workers to form and join unions of their choice, bargain collectively, and conduct legal strikes. The law also provides that it is lawful to conduct peaceful picketing in contemplation of a trade dispute. Trade unions and leaders of the trade union movement enjoy a strong voice in the labor and economic affairs of the country.
The law prohibits antiunion discrimination and dismissal for engagement in union activities. Although the law does not require reinstatement of workers fired for union activity, a court may order reinstatement.
The International Labor Organization (ILO) has noted with concern the discretionary authority of the government over trade union registration, and the government’s unfettered authority to investigate the financial accounts of trade unions.
The Trade Disputes (Arbitration and Inquiry) Act Chapter 215 provides for establishment of an arbitration tribunal and a board of inquiry in connection with trade disputes and allows provision for the settlement of such disputes. Labor unions and businesses are generally satisfied with the arbitration panels, which have tripartite representation. One of the mandates of the Department of Labor is to serve as a dispute resolution mechanism.
The Wages Council Act establishes the Wages Council, which addresses minimum wages, hours of work, overtime, vacation, sick leave, and maternity leave for specified categories of workers. Employers who fail to pay minimum wages are subject to orders for the payment of the wages. The statutory minimum wages are set out in the regulations under the Wages Council Act. The hours of work for specified categories of workers are usually eight hours per day with overtime generally calculated at a rate of time and a half and double time for work done on Sundays and public holidays.
The Equal Pay Act makes provision for the removal and prevention of discrimination, based on the sex of the employee, in the rates or remuneration for males and females in paid employment. Teachers, police officers, public servants, the Medical Association, industrial workers, and some members of the private sector, especially in financial services, operate under collective bargaining agreements.
The Protection of Employment Act No. 20 of 2003 allows for severance. Article 27 (1) allows employees to ask that their services be deemed as severed after six weeks of being laid off from work. There is typically no unemployment insurance or other social security safety net programs for workers laid off for economic reasons. The government, however, offered limited cash grants to some workers whose employment was impacted by the layoffs related to the COVID-19 pandemic.
The law provides for a minimum working age of 16. This provision is generally observed in practice. Compulsory primary and secondary education policies reinforce minimum age requirements. The Labor Department has a small cadre of labor inspectors who conduct spot investigations of enterprises and checked records to verify compliance with the labor laws. These inspectors may refer cases to the police and the public prosecutor’s office for legal action against an employer who employs underage workers.
Investors in the country are responsible for maintaining workers’ rights and safeguarding the natural environment. Workers have the right to report and/or leave unsafe work environments without jeopardy to continued employment.
St. Vincent and the Grenadines is classified as an upper-middle income country under the World Bank’s definition. The DFC may consider investments in certain projects in upper-middle-income countries that address key agency priorities.