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13.5. Other Anti-Avoidance Rules

Economic Substance Requirements

In 2021, Saint Lucia introduced the economic substance legislation for resident companies. The law provides that a resident company must satisfy the following economic substance tests/ requirements for each year of income in which it derives income from a relevant sector:

  • The company must be directed and managed in Saint Lucia;
  • The company must have an adequate number of qualified employees in Saint Lucia;
  • The company must incur adequate operating expenditure proportionate to the level of activity carried on in Saint Lucia;
  • The company must have an adequate physical presence in Saint Lucia; and
  • The company must conduct core income-generating activities in Saint Lucia.

The law requires companies engaged in the following sectors to demonstrate that they have substance:

  • Banking, insurance, and financing and leasing business;
  • Shipping;
  • International mutual funds business;
  • Headquartering;
  • Activities of a company holding tangible or intangible assets;
  • Activities of a pure equity holding company;
  • Distribution and service center business; and
  • A combination of any of the above business or activity.

Tax Information Exchange Agreements (TIEAs)

Tax Information Exchange Agreements (TIEAs) provide for the exchange of information on tax matters and Saint Lucia has concluded TIEAs with various countries including Aruba, Australia, Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, the Netherlands, the Netherlands Antilles, Norway, Portugal, Sweden, the United Kingdom, and the United States.

Exchange of Cross-Border Tax Rulings

Saint Lucia has agreed to exchange tax rulings with eligible jurisdictions from 1 September 2018 in line with the implementation of BEPS Action 5. A specific ruling can be exchanged with a relevant jurisdiction if it is international in nature and affects the relevant jurisdiction. The exchange is possible if there is an agreement between Saint Lucia and the relevant jurisdiction providing for the spontaneous exchange of tax information. The agreement can be a tax information exchange agreement (TIEA), a tax treaty or the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Financial Account Information Reporting and Exchange

Saint Lucia acceded to the OECD Mutual Assistance Convention as amended and the convention entered into force for Saint Lucia on 1 March 2017. Effective September 2018, Saint Lucia has signed the Common Reporting Standard (CRS) Multilateral Competent Authority Agreement and adopted measures to implement the automatic exchange of financial account information in accordance with the global standard for exchange of information developed by the OECD under the CRS.

Further, Saint Lucia concluded an Intergovernmental Agreement (IGA) with the United States on 1 September 2016 to improve international tax compliance and implement the U.S. Foreign Account Tax Compliance Act (FATCA).