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6.5. Deduction of Cross-Border Payments and Non-Deductible Expenses

Expenses incurred for the purpose of business are deductible unless they are specifically disallowed. Under the standard general rules, an expense is deductible for tax purposes only if the expense incurred is related to the business of the enterprise.

The following general expense types are not deductible or have limited deductibility for tax purposes in Saint Lucia:

  • Expenses incurred for earning exempt income are not deductible;
  • Expenses incurred for earning foreign-sourced income are not deductible, effective 1 January 2019 (see Sec. 5.5.);
  • Personal expenditure is not deductible;
  • Capital expenditure is not deductible;
  • Overhead charges, management fees, royalties, and other charges, paid to a non-resident or paid by a branch to its foreign head office, in excess of 10% of all allowable business deductions (excluding the cost of sales and capital allowances) are not deductible
  • Interest paid to foreign affiliates, if not at arm’s length (see Sec. 13.2.) is not deductible;
  • Interest on any loan, including interest on debentures is deductible to the extent the loan amount is used for earning taxable income;
  • Contribution to an unapproved pension fund is not deductible.;
  • Income tax, penalties, and interest paid on outstanding tax are not deductible;
  • Bribes, kickbacks, and illegal payments are not deductible;
  • Charitable contributions made to Saint Lucia National Trust for the purposes of contributions to an approved religious, charitable, medical or educational institution, sporting body or fund of a public charter are deductible if they do not exceed 25% of taxable income and are made for a minimum period of 3 years. Unapproved charitable contributions are not deductible; and  
  • Expenses towards meals, entertainment, officer’s compensation/life insurance, and payment to directors are deductible if they are incurred during the income year wholly for the purpose of earning taxable income.