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6.3. Depreciation and Amortization

The following capital allowances are available in Saint Lucia:

Assets Initial Allowance Annual Allowance
Industrial buildings  20% 5% (reducing balance method)
Commercial buildings (except hotels & rental properties) 20% 2.5% (reducing balance method)
Plant and machinery, fixtures and equipment, furniture, motor vehicles, aircraft, cinematographic equipment, computer software etc. 20% 10% to 33.33%
Other plant and machinery (not specified above) 20% 15%

Small scale business enterprises are granted an initial investment allowance of 10% of cost of plant and machinery provided such plant and machinery is imported into Saint Lucia for the first time and funded by non-local sources.

Start-up or incorporation expenses incurred by new small business enterprises are allowed as deductible expenses. New Small Business Enterprises are enterprises owned by resident citizens (not owning any business earlier) having gross income of not more than XCD 1 million, employing upto 50 persons and engaged in business activities as prescribed by the Minister of Finance.

The tax authorities may grant higher annual capital allowance on assets having higher or abnormal wear and tear, if requested by the taxpayer.

Gains on disposal of assets is taxed as ordinary income to the extent of depreciation recovered (i.e. sale value exceeds the aggregate of capital allowance and the cost of the asset), and any proceeds in excess of the cost of the asset is treated as capital gains, which is not subject to tax. If the proceeds on disposal of the assets are lower than the written-down value of the asset, then a balancing allowance is granted as deductible expense from the taxable income (i.e. cost exceeds the aggregate of capital allowance and the sales value of the asset).