Nevis LLC or other company warning

[poetwarrior]

I am hoping this provides some value to this forum.

On December 28th of 2018 Nevis passed a law that amended the tax free exemptions of Companies formed after January 1, 2019. For LLC’s this was codified in the Nevis Limited Liability Company (Amendment) Ordinance 2018. This legislation stripped future LLC’s from having tax exemption compared to domestic companies to comply with the EU demands. This means that any company founded in Nevis after January 1, 2019 would be subject to 30% plus tax on all profits.

Any company founded before that is grandfathered in until 2021 for taxation purposes.

Many what I would consider formally reputable Offshore company formation brokers are still pushing Nevis and claiming that it is zero tax. This is simply not true under the new law.

I spoke today with a major Offshore Company Register and they assured me that this was not the law and was only a rumor. They were perplexed when I confronted them with the new law and promptly hung up the telephone with me when pressed. I can only speculate but either these companies are ignorant of the law (in which case I would not use them) or they are simply trying to make a few bucks until the general public finds out the truth. In this case I did not direct them to Nevis but told them my criteria and needs and Nevis was recommended.

It seems to me that Nevis for the present time is a dead Tax Haven unless you are simply using it for a holding company that does not receive any profit.

 

[Sols]

This is happening in several locations, including for example Dominica and Saint Vincent and the Grenadines. It's just not worth the reputational disadvantages (and risks of financial repercussions) of having an offshore company legislation for most of these jurisdictions anymore.

It won't be long until we only have a handful left, and they will all be compliant with EU/OECD requirements on transparency and tax laws.

 

[John Andrews]

Corporate income tax - Nevis is updating its legislative and regulatory framework commitments to the EU COCG under its Tax Governance Initiative and at the same time to the OECD BEPS Inclusive Framework.

The parliament recently passed the Nevis Business Corporation (Amendment) Ordinance, 2018, and the Nevis Limited Liability Company (Amendment) Ordinance, 2018.

Under these amendments, LLCs and corporations incorporated on or before December 31, 2018, will still enjoy full tax exemptions until June 30, 2021, provided that they do not carry out business in Saint Kitts & Nevis.

LLCs and companies incorporated after December 31, 2018, will be subject to the local tax regime (currently, 33% tax on worldwide income). The amendments have also abolished the preferential tax regime for companies incorporated by non-residents that obtained a tax resident status.

However, the Nevis Island Administration is expected to shortly introduce additional legislation to implement a local territorial tax system for corporations and LLCs established from 1 January 2019. Therefore, income derived from foreign-sources would not be subject to taxation.


source: Set up a company and open a bank account in Saint Kitts and Nevis - Incorporations.IO

 

[poetwarrior]

Yes there have been talks about going to a territorial taxation system, which would be great and make this a viable option again. Some members of the government had stated that thy would have legislation to that effect by the 3rd quarter of this year. We are now at the end of the 3rd quarter and no legislation has been tabled as far as I can tell.

However, as the law currently stands any company that was formed after January 1, 2019 is currently subject to 33% taxation on their worldwide income. There are no guarantees that the Nevis Government will ever enact that legislation or that they will enact it before the end of the current fiscal year. I hope they do, but there is no guarantee.

So my point was not really about what Nevis might do in the future, but two things:
1. That currently setting up a Nevis company is with this taxation (although that may change). I personally would not risk my future income or taxation on what a government might do.

2. That offshore providers should not be saying to potential customers that a jurisdiction is currently zero tax when it is not.

I appreciate your link which shows that their are talks to do this. I should have mentioned it in my post. However, as of now the law is clear that new formations are taxed a 33%.

 

[John Andrews]

Yep. I think they also got rid of the $200k court deposit law. Looks like Belize is the best alternative right now for privacy and protection?

 

[Suzy Emerald]

Belize also has a similar taxation for new incorporated Ltd's. There are several threads on this topic on the forum.

 

[poetwarrior]

Manga38 that is correct. It used to be a 100k deposit pre-filing that had to be posted before a lawsuit would be accepted. They changed that in 2017 I think. Now it is like the Cook Islands and a defendant can file a motion to demand a bond and the Court will determine the bond amount. Since Nevis is a looser pays jurisdiction it is still likely to be steep. Nothing else has been done to weaken the Nevis asset protection statutes. They are still probably the best in the world from what I have seen, at least as far as business entity's go, trusts would be Cook Islands.

As Suzy Emerald said Belize recently passed legislation that took away certain companies tax immunity similar to Nevis. However, the last time I checked the legislative history the Belize LLC is still given zero tax on foreign sourced income. Not sure if this will last as it does not seem to have satisfied the EU. Also the Belize banking sector seems to be in an absolute mess this last year. So for now if you can use a hybrid structure or EMI it might work for now.

 

[bigladsmith]

This is the Sam situation as in Dominica, the clock is ticking until 31 December 2019 and then it’s all change.

Ive not seen any evidence that Dominica are doing a territorial type system? Has anyone else?

 

[sonato]

It seems to me that Nevis for the present time is a dead Tax Haven unless you are simply using it for a holding company that does not receive any profit.

Is that true? I mean it is some time since this was posted but still people mention NEVIS LLC's as an offshore option for tax freedom.

What if we are able to buy a aged company from 2016 or actually own one, would that change the situation?