Basseterre, St. Kitts, March 26, 2021 (SKNIS): In her support of the Bill entitled “Companies (Amendment) Bill, 2021”, which was passed in Parliament on March 25, the Honourable Wendy Phipps, Minister of International Trade, Industry, Commerce, Consumer Affairs and Labour, stated that changes to the Bill are meant to redefine the business operations that would be referred to as exempt companies.
Minister Phipps said that the changes proposed to the Bill were heavily focused on the changing terminology and implications for what were previously considered exempt companies, which going forward would now be referred to either as international or ordinary companies depending on the nature of the said companies’ operations.
The changes that were proposed in terms of the definition of an ordinary company would mean to identify that the registered company that is operating in the Federation is purely operating in the Federation as per Section 2 (E) of the Amendments, she said.
She noted that likewise, the inclusion of the definition international company means that such entities may be incorporated in St. Kitts, but managed and controlled outside of St. Kitts, and does not constitute business with residents of the country, in particular St. Kitts.
Minister Phipps said that some of the proposed amendments referred to in the Bill have a maturation date of June 20, 2021. By this time, she said, the exempt companies should have already applied at least 30 days prior to the Registrar of Companies to have a change in their business status to either ordinary or international as the case may be.
“The failure to make such application will result in a non-compliant company being permanently struck from the corporate register and in similar stride and fashion companies, which contravene Section 224 A of the parent Act, which addresses matters such as the tax-exempt status of such companies, also run the risk of losing any tax concessions that they had previously enjoyed,” said Minister.
Minister Phipps added that following the loss of tax privilege, there was also the recommendation that Section 225 and 226 be removed. They refer to inter alia to A) exemption from stamp duties and B) exempt companies being given the option to elect to pay income tax at a rate of one percent of its net profits in the event that such companies would have made at least two-thirds of its own aggregated funds from outside of the Federation.
“In essence, Mr. Speaker, companies that were formally tagged as exempt can no longer get a free ride in this jurisdiction in so far as the tax-exempt status is concerned,” she said.
In terms of Section 235, which sees the removal of the phrase ‘within10 years’ being removed from Section 1, it is indicating that the previous statute of limitation that would have been enjoyed, where a company that had been previously dissolved, would have had up until 10 years by which time any other further actions could be made relative to the company, will no longer have that protection of a statute of limitation, said the minister.
Minister Phipps noted that the amendments were non-controversial and were “self-explanatory in terms of what is being expected of the Companies Act.”
“They reflect to a large extent the ever-changing landscape in which St. Kitts and Nevis and all other countries, even Small Island Developing States like ours, are expected to perform in a global market place where we get no special privileges, we get no exemptions, no special treatments, and that we must comply with the international obligations to which we are party otherwise we suffer the consequences that affect our performance, our international image, and also our competitiveness as a jurisdiction. The issue of strict compliance with international standards, therefore, is non-negotiable,” she said.
The minister stated that the changes to the Bill were meant to satisfy the recommendations of the international agencies in particular the Organization for Economic Cooperation and Development (OECD).
“We are well aware based on the number of times that we would have had come to this house to make adjustments of a financial nature to legislation that would impact on the status of St. Kitts and Nevis overseas that the OECD is a formidable institution, which possesses considerable powers in terms of impacting our international rating as a Federation especially as it relates to offshore tax jurisdictions etc,” she said.
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COMPANIES (AMENDMENT) BILL, 2021, REPLACES EXEMPT COMPANIES
