The Caribbean region has long been associated with offshore banking and tax havens, making it a crucial hub for global finance. Several countries do not impose Caribbean taxes on income, capital gains, inheritance, and wealth.
So, who pays Caribbean taxes? Over the years, Caribbean countries have worked to reform them. Foreign investors are increasingly choosing to capitalise on taxes in the Caribbean.
- Who pays taxes in the Caribbean?
- Caribbean tax types
- Caribbean taxes by country
- Comparison of taxes in the Caribbean
- Caribbean tax challenges
- Caribbean tax havens
Which individuals and businesses are subject to taxation in the Caribbean?
Taxable articles and tax rates in the Caribbean hinge on whether you are a tax resident of a Caribbean country and an individual or legal entity.
Individual tax residents live in the Caribbean jurisdiction for more than 183 days annually. This can be an individual employed by a Caribbean company, someone living there on a retirement income, someone with income-generating investments in the Caribbean, or someone who owns Caribbean property. Caribbean tax residents must pay taxes in Caribbean countries with income tax.
The following are the criteria for Caribbean tax residency:
- Living in the country for at least 183 days a year.
- Valid registered address in the country.
- Economic activities in the country.
All legal entities registered or operating in the country are tax residents whether they earn all their income in the Caribbean or not. For Caribbean countries with income tax, non-residents pay tax on income earned in the country.
Types of Taxes in the Caribbean
Tax | Description |
Personal Income Tax | Some Caribbean jurisdictions tax individual income. |
Corporate Income Tax | Companies may be required to pay tax on profits. |
Value-Added Tax (VAT) | Caribbean countries impose a VAT on goods and services. |
Excise Tax | Imposed on specific goods like alcohol, tobacco, and petroleum. |
Property Tax | An annual tax charged on land and buildings. |
Stamp Duty | Tax on property transactions, sales, and transfers. |
Customs Duty | Levied on most imported goods. |
Export Duty | Some countries impose taxes on specific exports. |
Departure Tax | Charged on individuals leaving the country by air or sea. |
Social Security | Employers and their employees contribute to social security or pension schemes. |
Payroll Tax | Some Caribbean countries require businesses to withhold and remit payroll taxes. |
Franchise Tax | Charged on certain business operations of foreign corporations. |
Withholding Tax | Imposed on dividends, interest, and royalties of non-residents. |
Antigua and Barbuda Taxes
Antigua 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. The Antigua tax residency program excludes all income taxes.
Income tax
The government abolished personal income tax (PIT) in 2016.
Corporate tax
25 percent. 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
15 percent. Referred to as the Antigua and Barbuda Sales Tax (ABST), the standard rate is 15 percent, 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.
- 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
Dominica taxes are highly attractive. It is an island known for offshore banking services, no foreign income, wealth, or capital gains taxes, and strong privacy laws.
Income tax
15 to 35 percent. Tax residents must pay tax on all income derived in Dominica. Each resident has EC $30,000, which is not taxed. Any income over EC $30,000 tax exemption.
Tax rates in Eastern Caribbean Dollars (EC):
- $0 to $30,000 = 0 percent
- $30,001 to $50,000 = 15 percent
- $50,001 to $80,000 = 25 percent
- $80,001 above = 35 percent
Corporate tax
25 percent. 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 in Dominica. 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 and sole traders are income tax-exempt on their EC $36,000 earned.
Tax rates in Eastern Caribbean Dollars:
- $0 to $36,000 = 0 percent
- $36,001 to $60,000 = 15 percent
- $60,001 and above = 30 percent
Corporate tax
25 percent. Resident companies in Grenada pay 25 percent corporate tax on profits. Non-resident companies pay the same rate, but only on profit earned in 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, and commercial land tax is 0.5 percent.
- Hotels pay 0.3 percent land tax.
- Agricultural lands and buildings are exempt from property taxes.
St Kitts and Nevis Taxes
St Kitts taxes offer one of the Caribbean’s most favorable tax frameworks. The St Kitts and Nevis tax system does not include income taxes on local or working income, capital gains, wealth, or estate taxes.
Income tax
St Kitts is a Caribbean tax haven that abolished personal income tax in 1980.
Corporate tax
25 percent. This rate is applied to a company’s net profit. Nevis-registered Limited Liability Companies (LLCs) are exempt from capital gains and inheritance taxes on some or all the LLC’s assets. Start-up businesses may qualify for corporate tax holidays for up to 15 years.
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 vary by location. Agricultural, institutional, or educational real estate is typically exempt from property tax. Residential, commercial, and guest accommodation land and building tax rates range from 0.2 to 0.5 percent.
St Lucia Taxes
St Lucia taxes are moderate. Tax benefits include one of the lowest VAT tax rates in the region.
15 to 30 percent. Personal tax allowance is EC $25,400 per year for individuals. This rate applies to residents and non-residents.
Tax rates in Eastern Caribbean Dollars:
- $0 to $18,400 = 0 percent
- $18,401 to $30,000 = 20 percent
- $30,001 and above = 30 percent
Corporate tax
30 percent. St Lucia has one of the highest corporate tax rates among Caribbean countries. 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. Annual sales under EC $400,000 are exempt from VAT. 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 and Barbuda | Dominica | Grenada | St Kitts and Nevis | St Lucia |
Personal Income Tax | 0 percent | 0 percent up to EC $30,000; Thereafter,15-35 percent | 0 percent up to EC $36,000; Thereafter, 10-30 percent | 0 percent | 0 percent up to EC $25,400; Thereafter, 10-30 percent |
Corporate Tax | 25 percent | 25 percent | 25 percent | 25 percent | 30 percent |
VAT | 15 percent | 15 percent | 15 percent | 17 percent | 12.5 percent |
Property and land Tax | 0.1- 0.5 percent | 1 - 1.27 percent (Roseau and Canefield) | 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 | No tax | No tax | No tax | No tax | No tax |
Inheritance and Estate Tax | No tax | No tax | No tax | No tax | No tax |
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 withholding tax of up to 25 percent (country-dependent).
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 agreements 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
Information Exchange Agreements
Along with double tax treaties, Caribbean countries have Information Exchange Agreements with foreign countries. While Caribbean countries have strong privacy laws, tax transparency through IEAs prevents illegal tax avoidance and financial crimes like money laundering, ensuring Caribbean countries align with global security standards and provide reputable services.
Caribbean Tax Havens
An appeal of the Caribbean is the region has tax havens offering individuals and businesses financial privacy and little to no tax liability when living in the Caribbean or using the services of Caribbean banks.
The most popular Caribbean tax havens are British Overseas Territories like the Cayman Islands and the British Virgin Islands. These “pure” tax havens eliminate tax liabilities with no income or corporate taxes.
To a degree, countries offering Caribbean citizenship by investment, like Antigua and Barbuda and St Kitts and Nevis, are considered Caribbean tax havens because of their zero personal income tax rates and established offshore banking and trust management services.
Most Caribbean tax havens offer sophisticated financial services sectors along with zero personal and corporate tax rates, making them ideal for international tax planning.
Special Economic Zones (SEZs)
Some countries offer tax incentives for businesses that incorporate and set up operations in designated government-established areas to stimulate business activity and attract foreign investment. 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.
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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 starting a business in a Caribbean country. 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?
You pay taxes to Caribbean tax authorities if you invest in the Caribbean, live there for most of the year, or own Caribbean real estate. Tax rates vary from island to island. Antigua and St Kitts are two tax-free Caribbean islands that do not have income taxes at all, while others have progressive rates from 10 to 35 percent, which you can determine with a Caribbean taxes calculator.
Why is the Caribbean a tax haven?
Many ask, Is the Caribbean a tax haven? The Caribbean region is not entirely a tax haven, but many Caribbean countries are tax havens because of their financial privacy laws and lack of local or worldwide income, capital gains, inheritance, wealth, or gift taxes.
What Caribbean islands have no income taxes?
The Cayman Islands, Anguilla, Antigua and Barbuda, and St Kitts and Nevis are four Caribbean countries with no income tax that allow foreign nationals to eliminate their tax burdens.
Which Caribbean island has the lowest taxes?
The British Overseas Territories of the British Virgin Islands and the Cayman Islands are pure tax havens with the lowest taxes in the Caribbean. Neither country imposes direct taxes on income, inheritance, wealth, and capital gains.
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 a low tax regime like Dominica, which only charges property taxes in specific municipalities.
What are the tax implications for expatriates living in the Caribbean?
Tax implications for expats living in the Caribbean depend on the country they live in, whether they’re tax residents, and another country they live in pays income tax or other taxes. Expat tax residents may have no obligation to pay income taxes if they live in a country that does not impose Caribbean income tax.
How do tax systems in the Caribbean differ from other regions?
Caribbean tax systems differ from other regions because they rely on indirect taxes like VAT, customs duties, and tourism-related levies rather than income tax. Many Caribbean nations, like the Bahamas, Antigua and Barbuda, and St Kitts and Nevis, have no personal income tax, making them attractive to investors and those seeking offshore financial services.
Is Barbados still a tax haven?
While many consider Barbados a Caribbean tax haven, it is not officially classified as such due to imposing income tax and being removed from the OECD no-tax country list in February 2023.
