Filing of consolidated tax return by a group of companies is not allowed in Saint Lucia, however, group relief in respect of operating losses is allowed, subject to certain conditions.
A member of a group of companies (known as the 'Surrendering Company') may surrender / transfer their operating losses to another member company of the same group (known as the 'Claimant Company'). The claimant company can offset the surrendering company’s operating loss against its taxable income which is referred to as 'group relief', subject to fulfilment of the following conditions:
- Surrendering and claimant companies are members of the same group
- Both companies are resident companies in Saint Lucia
- Claimant company offsets their own operating losses against the taxable income before considering the operating losses of the surrendering company
- Operating losses (for which group relief is claimed) should not exceed half of the assessable income / taxable income of the claimant company. In case the losses exceed the assessable income then the same can be carried forward under normal provisions (See Sec 7.1)
- Surrendering company gives consent for the relief
- The group relief is subject to approval by the tax authorities on fulfilment of certain conditions
- Group relief can be claimed within 2 years from the end date of the surrendering company’s tax year to which the claim relates
Operating losses, for which group relief is claimed, are calculated as losses incurred by surrendering company excluding following items:
- current year's loss,
- capital allowances, and
- expenses payable to a member company (of same group) for which deduction is claimed but the same is not included in the income of the recipient company.
For claiming group relief, members are considered as belonging to the same group if:
- One company is 51% subsidiary of the other; or
- Both companies are 51% subsidiaries of a third company.
In determining whether a company is a 51% subsidiary of another company, following share capital is excluded:
- if profits from the sale of shares (which is owned directly or indirectly in a company) is a trading receipt for its direct owner; or
- if shares are owned, directly or indirectly, in a company which is a non-resident in Saint Lucia.
Additionally, the parent company must be beneficially entitled to atleast 51% of the profits and assets available for distribution to shareholders of the subsidiary on a winding up.
Group relief is also available in cases of companies (forming part of a group) in the course of restructuring or reorganization, if approved by the tax authorities. However, losses carried forward by a company joining the group after restructuring or reorganization cannot be utilized, for claiming group relief, by existing companies in the group. Further, the operating losses carried forward by the group cannot be utilized by the company joining the group after restructuring or reorganization for a minimum period of 2 years after joining.
Group relief provisions are not applicable to companies established under International Business Companies Act or companies which are granted tax concessions under any other enactment, with the exception of companies operating under the Tourism Incentives Act.