2020 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 as of December 2019, St. Vincent and the Grenadines had an estimated gross domestic product (GDP) of USD 825 million in 2019, with forecast growth of 3.4 percent in 2020. However, the coronavirus pandemic is expected to have far-reaching consequences, notably negative near-term economic growth. The government has announced an economic recovery and stimulus package.
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 ranks 130th out of 190 countries in the 2020 World Bank’s 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 involvement or ownership in locally registered companies. The islands’ 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. However, it does have 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.
Table 1: Key Metrics and Rankings
Transparency International Corruption Perceptions Index
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The government of St. Vincent and the Grenadines, through Invest SVG, strongly encourages FDI, particularly in industries that create jobs and earn foreign currency. St. Vincent and the Grenadines is an emerging and developing investment destination. 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. St. Vincent and the Grenadines benefits from a low inflation rate and growing opportunities in the trade and export sectors.
Invest SVG’s FDI policy is to attract investment into the aforementioned 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 involvement 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 enterprise, although some activities such as telecommunications, utilities, broadcasting, banking, and insurance require a government license.
Other Investment Policy Reviews
The OECS, of which St. Vincent and the Grenadines is a member, has not conducted a trade policy review in the last three years.
Established in 2003 under the Companies Act, 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. Invest SVG offers an online resource that is useful for navigating the laws, rules, procedures, and registration requirements for foreign investors. It is available at http://www.investsvg.com.
According to the World Bank’s 2020 Doing Business Report, St. Vincent and the Grenadines ranks 93rd of 190 countries in the ease of starting a business, which takes seven procedures and 10 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 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. Vincent and the Grenadines has not signed a bilateral investment treaty with the United States. However, the country does have bilateral tax treaties with the United States, Canada, the UK, Denmark, Norway, Sweden, and Switzerland. In 1989, 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 United Arab Emirates 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 goes further, establishing the CSME and permitting the free movement of goods, capital, and labor within CARICOM states.
Organization of Eastern Caribbean States
The Revised Treaty of Basseterre establishes the Organization of Eastern Caribbean States (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 three associate members (Anguilla, Martinique, and the British Virgin Islands). Guadeloupe signed an accession agreement with the OECS in March 2019. The purpose of the Treaty is to promote harmonization among member states in foreign policy, defense and security, and economic affairs. The six independent countries and Montserrat 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 the African, Caribbean and Pacific Group of States (CARIFORUM) and the European Community 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 CARIFORUM states into the world economy by improving their trade capacity and creating investment-conducive environments. The Agreement promotes trade-related developments in areas such as competition, intellectual property, public procurement, the environment, and protection of personal data.
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 islands by expanding foreign and domestic investment in non-traditional sectors, diversifying country economies, and expanding their exports. It permits duty-free entry of products manufactured or assembled in St. Vincent and the Grenadines into U.S. markets.
Caribbean/Canada Trade Agreement
Caribbean/Canada Trade Agreement (CARIBCAN) is an economic and trade development assistance program for Commonwealth Caribbean countries in which Canada provides most products originating in Commonwealth Caribbean countries with duty-free access to its national market.
3. Legal Regime
Transparency of the Regulatory System
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 procedures 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: www.gov.vc. The government sometimes establishes a select committee to suggest amendments to specified 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 established under the Standards Act of 1992 to prepare and promulgate standards in relation to goods, services, processes, and practices. As a signatory to the World Trade Organization’s (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 January 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. These measures have not been fully implemented. A full list of measures undertaken pursuant to the TFA is available at: https://www.tfadatabase.org/members/saint-vincent-and-the-grenadines/measure-breakdown.
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 the 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 Privy Council of the UK.
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 subject to the original jurisdiction of the CCJ only.
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 in order to access technology, expertise, markets, and capital.
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 the Community, and actions by which an enterprise abuses its dominant position within the Community. No legislation is yet in operation 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 have been 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 the investment are not met. The U.S. Embassy Bridgetown 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 of October 14, 1966, 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 main hindrances to timely resolution to commercial disputes. St. Vincent and the Grenadines ranks 61st of 190 countries in enforcing contracts in the report. Through the Arbitration Act (1952), 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 Bridgetown 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 Appeal 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.
4. Industrial Policies
St. Vincent and the Grenadines offers many incentives via the Fiscal Incentives Act 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 the construction and operation of the business. Other incentives are the exemption from or reduction of duty on the importation or purchase of vehicles for use in the operation of the business, and the reduction of property tax of up to 10 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 period; 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 10 years. Enclave enterprises (producing wholly for markets outside 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.
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 maintain 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 business company may import machinery and equipment free from certain taxes and customs 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 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. However, neither the trust nor its beneficiaries will be entitled to tax exemptions for any year during which the trust had one or more resident beneficiaries. An international trust, except one that is an international company, will not become void or voidable as a result of 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
There are no foreign trade zones or free trade zones in St. Vincent and the Grenadines.
Performance and Data Localization Requirements
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 an export allowance to qualifying enterprises for the export of approved products.
The government does not mandate local employment. The Employment of Foreign Nationals and Commonwealth Citizens Act provides that foreign nationals or Commonwealth citizens must obtain a 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.
While there are no formal performance requirements, government officials strongly encourage investments they believe will create jobs and increase exports and foreign exchange earnings. In an effort to increase investment, the government of St. Vincent and the Grenadines introduced a series of investment incentives, codified in the Fiscal Incentives Act. These include tax holidays, import duty exemption, duty-free concessions on the purchase of machinery and equipment, and various tax exemptions. The government may grant incentives to some investments involving real estate if investors meet minimum investment requirements prescribed by the Alien’s (Land-Holding Regulation) Act. 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.).
5. Protection of Property Rights
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 in order 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 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 2019 Doing Business Report ranks St. Vincent and the Grenadines 168th 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 regarding its commitment to the protection of intellectual property rights. While the legal structures governing intellectual property are adequate, enforcement measures are inconsistent. The administration of intellectual property laws is the responsibility of the Office of the Attorney General. The CIPO administers the registration of patents, trademarks, and service marks the. St. Vincent and the Grenadines is a signatory to the Paris Convention on IPR and the Berne Convention. 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 2019 Special 301 report or in the notorious market report.
Article 66 of the Revised Treaty of Chaguaramas (2001) 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 intellectual property rights 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.
6. Financial Sector
Capital Markets and Portfolio Investment
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 Eastern Caribbean Securities Exchange 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, 2019, there were 149 securities listed on the ECSE, comprising 128 sovereign debt instruments, 13 equities, and eight corporate bonds. Market capitalization stood at USD 1.8 billion. This represents a significant decrease compared to the previous year and is attributed mainly to the delisting of CIBC First Caribbean International Bank Ltd, whose market capitalization previously accounted for 79.2 percent of total capitalization. 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. Lending by public and private financial institutions to the private sector remained relatively flat.
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 and as such, the ECCB controls St. Vincent and the Grenadines’ currency and regulates its domestic banks.
The Banking Act 2015 is a harmonized piece of legislation across the 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.
Both 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 USD 833 million at the end of December 2019 and remained relatively consistent during the previous year. The reserve requirement for commercial banks was 6 percent of deposit liabilities.
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 on the issue and appointed a Committee of Ministers of Finance on Correspondent Banking to continue to monitor the issue.
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 Eastern Caribbean dollar 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 business companies are exempt from taxation. Under present regulations, there are no personal income taxes, estate taxes, corporate income taxes, or withholding taxes for international business companies operating in St. Vincent and the Grenadines. International business 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 with 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, of which St. Vincent and the Grenadines is a member, maintain a sovereign wealth fund.
7. State-Owned Enterprises
There are currently 28 state-owned enterprises (SOEs) operating in the following sectors: water, 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 all 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 are no targeted privatization programs in St. Vincent and the Grenadines.
8. Responsible Business Conduct
The government and the public view positively responsible business conduct. 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 local and foreign owned enterprises volunteer and 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 at times partners with NGOs in activities and generally encourages philanthropy.
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. However, if there are confiscation proceedings initiated or contemplated against a corrupt official, pursuant to the Proceeds of Crime Act, No. 38 of 2013, 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. Human rights organizations assisted individuals in obtaining information but considered the mechanism for gaining access deficient. Only a narrow list of exceptions outlining the grounds for nondisclosure exists, yet there is no specific timeline for the relevant authority 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. Public outreach activities via radio call-in shows encouraged citizens to access public information.
Resources to Report Corruption
Contact at the government agency or agencies that are responsible for combating corruption:
Director of the Public Prosecutions
Office of Public Prosecutions
Frenches Gate, Kingstown
Telephone Number: 784-457-1344
Email Address: firstname.lastname@example.org
Commissioner of Police
Royal St. Vincent and the Grenadines Police Force
Telephone Number: 784-457-1211
Email Address: email@example.com
10. Political and Security Environment
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 December 2020.
11. Labor Policies and Practices
St. Vincent and the Grenadines’ active labor force was approximately 41,512 persons. The government generally enforced labor laws effectively. Government penalties were 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 prohibits anti-union discrimination and dismissal for engaging in union activities.
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 were 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 Councils, which address 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 payment of the wages. The statutory minimum wages are set out in the regulations made 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 no unemployment insurance or other social security safety net programs for workers laid off for economic reasons.
Trade unions and the leaders of the trade union movement enjoy a strong voice in the labor and economic affairs of the country. The law also provides that it is lawful to conduct peaceful picketing in contemplation of a trade dispute.
The law provides for a minimum working age of 16, and this provision was generally observed in practice. Compulsory primary and secondary education policies reinforced minimum age requirements. The Labor Department had 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 take 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.
12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
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.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy