Detail

(1) A relevant entity shall, for each year of income in which it operates or carries out activities in a relevant sector, have adequate economic substance. (Substituted by Act 15 of 2020)

(2) Where there is a combination of relevant sector activities the relevant entity must have economic substance for each activity carried on in the relevant sectors.

“directed and managed in Saint Lucia” means —

(a) the company's board of directors meets in Saint Lucia at an adequate frequency given the level of decision-making required;

(b) during each meeting of the board of directors, there is a quorum of directors physically present;

(c) strategic decisions of the company are set at meetings of the board of directors and minutes of the meetings reflect strategic decisions;

(d) the board of directors as a whole, has the necessary knowledge and expertise to discharge its duties as a board; and

(e) the minutes of the board meetings and the company records are kept in Saint Lucia.

(5) For the purposes of subsection (3)(e), a relevant entity conducts core income-generating activity if it outsources the activity, and is able to demonstrate adequate supervision of the outsourced activity and that the activity is conducted in Saint Lucia.

(6) A relevant entity that is only carrying on an activity in a relevant sector that is the business of a pure equity holding company is subject to reduced economic substance requirements which is satisfied if the relevant entity confirms that —
1. (a) it has complied with the applicable filing requirements under the Companies Act, Cap. 13.01, the International Business Companies Act, Cap. 12.14 and the Income Tax Act, Cap. 15.02;
1. (b) it has adequate human resource and premises in Saint Lucia for holding and managing equity interests or shares in another company.

(7) Notwithstanding subsection (1), an intellectual property company shall demonstrate a direct relationship between the income arising from intellectual property assets and the expenditure of the company that contributes to the generation of that income to qualify for an exemption on income accruing from a source outside of Saint Lucia under the Income Tax Act. (Substituted by Act 15 of 2020)

(7A) In determining whether income qualifies for an exemption under subsection (7), the formula specified in Schedule 2 applies. (Inserted by Act 15 of 2020)

(7B) The application of the CARICOM Double Taxation Agreement under the CARICOM (Double Taxation Agreement) Act applies to all intellectual property income. (Inserted by Act 15 of 2020)

(7C) An entity holding or exploiting an intellectual property asset only qualifies for the tax exemption on foreign source income if —
1. (a) the entity's total group-wide turnover does not exceed E50000000 or the equivalent in Eastern Caribbean Dollars, using a 5 year average; and
1. (b) the entity's domestic income does not exceed E7.5000000 or the equivalent in Eastern Caribbean Dollars, using a 5 year average.
1. (Inserted by Act 15 of 2020)

(7D) Where an entity meets the requirements under subsection (7C) and qualifies for the tax exemption on foreign source income, the Competent Authority shall make the necessary information exchanges in accordance with the standards set out by the Organization for Economic Cooperation and Development on harmful tax practices. (Inserted by Act 15 of 2020)

(7E) Notwithstanding subsections (7A) and (7C), the treatment of income arising from intellectual property assets is subject to the provisions of all regional and international Agreements and Conventions in relation to tax matters. (Inserted by Act 15 of 2020)

(8) In the case of a high risk intellectual property company, that company is not presumed to meet the economic substance requirements in the absence of research and development, unless the relevant entity provides evidence that income generated is directly linked to activities in Saint Lucia to rebut this presumption. (Amended by Act 15 of 2020)