The Caribbean region has long been associated with offshore banking and tax havens, making it a crucial hub for global finance. Caribbean taxes play a pivotal role in the economies of Caribbean nations, contributing significantly to government revenue and development. For example, revenue statistics showed the average tax-to-GDP ratios for Caribbean countries stood at 22.8 percent in 2021, due largely to VAT.
So, who pays Caribbean taxes? Over the years, Caribbean countries have worked to reform their tax systems to better align with their own evolving economic and development goals and respond to local needs. This is especially true in the Eastern Caribbean islands that rely heavily on tourism-related revenue. A good example is the tax incentives for foreign investors aimed at making citizenship by investment (CBI) programs more attractive. We’ll focus on the five Caribbean CBI countries and their tax regimes: Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, and St Lucia.
Favorable Tax Conditions
Many factors are involved in creating the Caribbean’s tax environment:
- Caribbean countries have their own tax authorities and financial regulatory authorities responsible for tax collection, enforcement, and overseeing financial practices.
- Organization for Economic Co-operation and Development (OECD) helps set international tax standards
- Caribbean Community (CARICOM) influences tax policies through regional agreements and economic policies
Tax havens
A major appeal of the Caribbean has been its reputation as a region of tax havens offering individuals and businesses financial privacy and little to no tax liability when banking in the Caribbean. The more popular Caribbean tax havens are Panama, the Bahamas, and a British Overseas Territory like the Cayman Islands. These “pure” tax havens provide the opportunity to eliminate tax liabilities with no income or corporate taxes and facilitate offshore financial and business activities.
To varying degrees, Dominica, Antigua and Barbuda, and St Kitts and Nevis may be classified as tax havens because of their desirable tax structures and offshore banking and trusts, as well as legislation supporting offshore company incorporation and privacy. Neither Antigua and Barbuda nor St Kitts and Nevis levy taxes on income, making them very attractive to individuals wanting to lower their tax burden by acquiring a second passport via their citizenship by investment (CBI) programs.
Special Economic Zones (SEZs)
Some countries offer tax incentives for businesses that incorporate and set up operations in designated government-established areas. These Special Economic Zones (SEZs) might be free trade zones, industrial parks, export processing zones, or other specialized zones. Incentives can be tax holidays or other tax exemptions.
The Antigua Free Trade and Processing Zone (FTPZ) in the northeastern part of the island offers a 25-year tax holiday on corporate taxes, import duties, sales tax, and property tax.
The Dominica Free Zone and the Vieux Fort Free Zone in St Lucia offer exemption from VAT, import taxes, and property tax for up to 15 years.
The Basseterre Specialized Port Area of St Kitts and Nevis functions as an SEZ and has a range of tax cuts, including exemption from VAT and import duties.
The Grenada Industrial Development Corporation (GIDC) also functions like an SEZ with tax holidays and duty-free import concessions.
Antigua and Barbuda Taxes
Antigua and Barbuda taxes lead the country to be considered a tax haven because of its low personal and corporate income taxes, lack of capital gains tax, and strict financial privacy laws which support a well-established offshore banking sector.
Income tax
The government abolished personal income tax (PIT) in 2016.
Corporate tax
0-25 percent on a sliding scale. This applies to companies incorporated or registered in Antigua and Barbuda and/or managed and operated in Antigua that derive income from and hold assets in the country. Both local and foreign income is taxed. Non-resident companies, on the other hand, are only taxed on income from within Antigua and Barbuda.
VAT
17 percent. Referred to as the Antigua and Barbuda Sales Tax (ABST), the standard rate of 17 percent as of 1 January 2024 applies to the selling price of goods and services, while a lower rate of 12.5 percent applies to the hotel and accommodations sector. Prescription medicines, transportation around Antigua and Barbuda, financial services, educational services, and medical services are exempt.
Property and land taxes
- 0.1 to 0.5 percent property tax on the market value. The actual rate will depend on the property type, whether residential or commercial.
- 10 to 20 percent land tax. The actual rate depends on the duration of land ownership and whether it is owned by a resident or non-resident.
- 2.5 percent transfer tax. This tax only applies to non-residents who are interested in purchasing property outside of the CBI program and have obtained an Alien Landholding License to do so.
- 2.5 percent or 7.5 percent stamp duty. Property sales incur a stamp duty of 2.5 percent of the purchase price for the buyer and 7.5 percent for the seller.
Dominica Taxes
Hailed as a tax haven, Dominica’s tax system is highly attractive. It is another island known for its absence of income, wealth, and capital gains taxes, and strong privacy laws.
Income tax
15 to 35 percent. Tax residents must pay tax on all income derived in Dominica and abroad unless there is an existing tax treaty in place. Each resident is entitled to a Resident Allowance of EC$30,000, which is not taxed. Any income over EC$30,000 is taxed progressively from 15 to 35 percent.
Fun fact: Individuals who choose to retire in Dominica do not pay taxes on income from foreign sources if they did not reside in Dominica before retirement.
Non-residents pay taxes only on income earned within Dominica. Since there is no residency requirement for investors in the CBI program, investors would be exempt from personal income taxes as long as they spend less than 183 continuous days on the island and receive no income in Dominica, such as rental income.
Corporate tax
25 percent of net profit. Companies registered and operating in Dominica must pay 25 percent corporate tax on their worldwide profit, while non-resident companies are only taxed on the profits earned in Dominica.
VAT
15 percent. This rate applies to the sale of goods and services, except hotels and diving companies, where the rate is 10 percent. VAT-exempt goods include sugar, meat, fish, rice, milk, flour, medical supplies, and medications. VAT is not charged on rent, real estate sales, or financial services.
Property and land taxes
There is no official property tax, contributing to its low Caribbean living costs, but there are fees and duties that must be noted. Properties located in the cities of Roseau and Canefield incur an annual municipal tax of 1.27 percent of the assessed property value. Landlords who rent out their property pay a state duty of one percent of the rent.
Grenada Taxes
Grenada taxes offer a moderate tax regime with generous allowances.
Income tax
10 to 30 percent. Employees, corporations, sole traders, trustees, and partners within partnerships who earn more than EC$36,000 per year are required to pay income taxes. Tax residency entitles one to an EC$36,000 tax allowance, so you don’t pay taxes on the first EC$36,000 of annual income. You will pay a ten percent income tax on the first EC$24,000 (US$8,880) earned in Grenada. Any income in excess of that amount carries a 30 percent rate of tax. Non-residents pay a 15 percent income tax rate on earnings in Grenada, but there is no tax on foreign-earned income or capital gains.
Corporate tax
28 percent. Resident companies in Grenada pay 28 percent corporate tax on profits. Non-resident companies pay the same rate, but only on profit earned within Grenada.
VAT
15 percent. VAT in Grenada is charged at 15 percent for goods and services, with a few exceptions. The rate for hotel accommodations and dive operations is 10 percent. There is also a higher tax on cell phones, which is 20 percent.
Property and land taxes
0.2 to 0.5 percent. Property tax is calculated on the market value with the rate depending on property usage.- Residential land tax is 0.2 percent, while building tax is 0.3 percent. Commercial land tax is 0.5 percent, while building tax is 0.3 percent.
- Hotels pay 0.3 percent land tax; 0.02 percent building tax.
- Agricultural lands and buildings are exempt from property taxes.
0.2 to 0.5 percent. Property tax is calculated on the market value with the rate depending on property usage.Fun fact: Owner-occupied property is granted a homestead exemption of EC$100,000 that is deducted from the building value. The remaining becomes the assessed value, and the residential tax rate is applied to that figure.
St Kitts and Nevis Taxes
St Kitts and Nevis tax system is one of the most favorable in the Caribbean.
Income tax
St Kitts is another Caribbean tax haven where PIT was abolished in 1980.
Corporate tax
33 percent. This rate is applied to a company’s net profit.
VAT
17 percent. The standard VAT rate applied to goods and services is 17 percent, while the rate for hotel accommodations and restaurants is 10 percent. Certain basic food items are zero-rated — rice, sugar, flour, dairy milk, oats, and bread. Some services and utilities are exempt from VAT, such as medical and dental services, electricity and water, insurance, transportation, and school tuition.
Property and land tax
0.2 to 0.5 percent. Property and land tax rates are determined based on location – whether on the island of St Kitts or Nevis – as well as property use. In general, land and buildings on the island of St Kitts that have been certified for agricultural, institutional, or educational use are exempt from property tax. Residential, commercial, and guest accommodation land and building tax rates range from 0.2 percent for residential and accommodation to 0.3 percent for commercial.
Exemption: Newly constructed residential properties are exempt from property tax for one year from the date of completion.
St Lucia Taxes
The St Lucia tax regime is moderate. It also boasts one of the lowest VAT tax rates in the region.
Income tax
15 to 30 percent progressive rate. Personal tax allowance is EC$25,400 per year, meaning individuals do not pay income tax if they make less than EC$25,400 per year. Any income exceeding EC$25,400 is taxed at a progressive rate starting at 15 percent and increasing to 30 percent. This rate applies to residents and non-residents.
Corporate tax
30 percent. Non-resident companies are only taxed on income earned in St Lucia. Companies registered in St Lucia are taxed on global income.
VAT
12.5 percent. However, companies are exempt from paying VAT if their annual sales turnover falls below EC$400,000 (i.e., the threshold for VAT registration). Goods and services exempt from VAT include medical and transportation services, financial and insurance services, education, housing rental, fuel, water and electricity, goods for export, and duty-free merchandise.
Property and land taxes
0.25 to 0.4 percent. Residential property tax is 0.25 percent of its market value. Commercial property is taxed at 0.4 percent of its market value.
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Caribbean Taxes At a Glance
In this section, we’ve summarized the tax rates discussed above (such as withholding tax rates and income tax rates) in an easy-to-compare table.
Tax Type | Antigua & Barbuda | Dominica | Grenada | St Kitts & Nevis | St Lucia |
Personal Income Tax | 0 percent | 0 percent up to EC$30,000; Thereafter progressive from 15-35 percent | 0 percent up to EC$36,000; Thereafter progressive from 10-30 percent | 0 percent | 0 percent up to EC$25,400 Thereafter progressive from 15-30 percent |
Corporate Tax | 25 percent | 25 percent | 28 percent | 33 percent | 30 percent |
VAT | 17 percent | 15 percent | 15 percent | 17 percent | 12.5 percent |
Property and land Tax | 0.1 - 0.5 percent | 1-1.27 percent | 0.2 - 0.5 percent | 0.2 - 0.5 percent | 0.25 - 0.4 percent |
Withholding tax on dividends, interest, and royalties | 0 percent (resident company to resident shareholders); 25 percent (resident company to non-resident shareholders) | 0-35 percent (resident company to resident shareholders); 15 percent (resident company to non-resident shareholders) | 10-35 percent (resident company to resident shareholders); 25 percent (resident company to non-resident shareholders) | 0 percent (resident company to resident shareholders); 15 percent (resident company to non-resident shareholders) | 10-25 percent (resident company to resident shareholders; 25 percent resident company to non-resident shareholders) |
Capital gains | 0 percent | 0 percent | 0 percent | 0 percent | 0 percent |
Inheritance and Estate Tax | 0 percent | 0 percent | 0 percent | 0 percent | 0 percent |
Tax in Caribbean countries: Key takeaways
- Caribbean countries don’t have capital gains tax and inheritance tax.
- Antigua and Barbuda and St Kitts and Nevis don’t levy a personal income tax. Other Caribbean countries charge a progressive tax rate of ten percent to 35 percent (based on the income amount).
- To be considered a tax resident of a Caribbean country, you must spend at least 183 days in the country in a year.
- Withholding tax isn’t levied if dividends, interest, or royalties are paid to tax residents. If you register a company in a Caribbean country but remain a tax resident of another state, you will pay a withholding tax of up to 25 percent (country-dependent).
- As applicants to the Caribbean CBI programs don’t need to live in the chosen country, they don’t need to become tax residents.
Challenges in Caribbean Taxation
Double tax treaties
The Caribbean has International Tax Alliances and Agreements. Caribbean double taxation agreements (DTAs) are bilateral agreements between a Caribbean country and another country, preventing individuals and businesses from being taxed twice on the same income or profits. They typically allocate taxation rights based on the taxpayer’s tax residency. If an individual or business is a tax resident of one of the treaty countries, that country generally has the primary right to tax the income. To avoid double taxation, the country where the income is earned (the source country) may provide tax relief through a tax credit or exemption.
These treaties benefit global trade and investment, economic cooperation, and international businesses and investors. Countries that are not party to as many tax treaties may be perceived as less attractive for international businesses and individuals looking to minimize their global tax burden.
A Tax Information Exchange Agreement (TIEA) is a bilateral agreement between two countries that facilitates the exchange of information related to tax matters through legislation such as the Foreign Account Tax Compliance Act (FATCA) for US citizens. It is mainly to prevent tax evasion and promote compliance with tax laws by allowing the sharing of financial information between the signatory countries upon request.
St Lucia:
- DTAs with other CARICOM member states and with Switzerland
- TIEAs with Aruba, Australia, Belgium, Canada, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Iceland, Ireland, Netherlands, Netherland Antilles, Norway, Portugal, Sweden, UK, US
Grenada:
- DTAs with the UK, Switzerland, and CARICOM states
- TIEAs with Australia, Belgium, Denmark, Faroe Islands, Finland, France, Greenland, Iceland, Netherlands, Netherland Antilles, Norway, Sweden, Vanuatu, UK
St Kitts and Nevis:
- St Kitts double tax agreements with CARICOM, Canada, Denmark, Monaco, New Zealand, Norway, San Marino, Sweden, Switzerland, UK, and US
- TIEAs with Aruba, Australia, Denmark, Faroe Islands, Finland, Greenland, Iceland, Liechtenstein, Norway, Netherlands, Netherland Antilles, New Zealand, Sweden, UK
Dominica:
- DTAs with CARICOM, Canada, and Switzerland
- TIEAs with Australia, Belgium, Canada, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Iceland, New Zealand, Norway, Portugal, Sweden, UK
Antigua and Barbuda:
- DTAs with CARICOM, Sweden, and Switzerland
- TIEAs with Aruba, Australia, Belgium, Denmark, Faroe Islands, Finland, France, Greenland, Iceland, Ireland, Liechtenstein, Netherlands, Norway, Netherland Antilles, Portugal, Sweden, US, UK
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As you can see, optimizing your taxes is pretty straightforward as a Caribbean citizen. Obtaining citizenship in a Caribbean tax haven is as easy as making a minimum investment to a government fund, a qualifying real estate purchase, or a business enterprise. For further details, visit our Caribbean Citizenship by Investment Comparison guide and contact us today.
Frequently Asked Questions about Caribbean Taxes
Do you pay tax in the Caribbean?
Yes, you pay taxes in the Caribbean whether you invest in the Caribbean, live there, or have tax residency. Tax rates vary from island to island. Antigua and St Kitts are two tax free Caribbean islands, imposing no income taxes at all, while others have progressive rates from 10 to 35 percent, which you can determine with a Caribbean taxes calculator. The same applies to corporate tax and VAT rates. None of the five countries has inheritance taxes.
Why is the Caribbean a tax haven?
Many ask, Is the Caribbean a tax haven? Simply, yes, the Caribbean region is considered a tax haven because of its financial privacy laws and low tax implications. For example, tax-free Caribbean islands include Antigua and Barbuda and St Kitts and Nevis levy no income taxes. Additionally, no taxes are levied on dividends, interest, and royalties in all Caribbean countries except St Lucia.
What Caribbean islands have no income taxes?
Antigua and Barbuda and St Kitts and Nevis have are two countries with no income tax that allow foreign nationals to eliminate their tax burdens. If you find this an appealing prospect, you may want to consider their citizenship by investment programs.
Which Caribbean island has the lowest taxes?
The British Overseas Territories of the British Virgin Islands and the Cayman Islands are pure tax havens because of the following:
- Low tax regime
- No direct taxes, such as income tax, capital gains tax, or inheritance tax
What Caribbean island has no property tax?
Caribbean islands with no property taxes include a pure tax haven like the Cayman Islands and other countries in the region with lenient tax administrations like Dominica, which only charges property taxes in specific municipalities.
What are the tax implications for expatriates living in the Caribbean?
Expats living in the Caribbean need to experience various tax implications, which can vary significantly by Caribbean nation and their country of citizenship or permanent residence. Many Caribbean nations offer favorable tax regimes to attract foreign residents who contribute to their economic growth, such as no income taxes. However, expats who maintain economic ties with their home countries will be liable to pay income tax there.
