I read the article written by Mr Legair on the St. Vincent Times on February 9th concerning Residence by Investment as a viable alternative to CBI.
I think two suggestions made in the article are very valid, and should be considered by the Government when drafting the announced CBI legislation.
The first argument is that making naturalisation (registration as SVG citizen) of an alien contingent non only on an investment in the country, but also on prior residence in the country,
can avoid falling prey of the anti CBI regulations recently introduced by European and other developed countries, that argue, not without reason, that passports should not be considered as commodities that can be just bought for money,
and consequently reserve the right to ban visa free entry to holders of purchased passports from CBI issuing countries.
Most countries in the world do indeed grant citizenship to foreign residents after a certain number of years of stay, and the required duration of stay is clearly a sovereign decision of the country concerned.
The second argument is that making tax residence in SVG attractive and safe for high net worth of highly skilled foreign professionals is a necessary precondition for a successful RBI programme leading to citizenship.
Many people hold several nationalities, for example persons born from two parents coming from different countries, and oftentimes seeking an additional nationality not obtained at birth is not only determined by interest in a more useful travel document, but also
by the interest in taking tax residence in an attractive jurisdiction.
Now, coming to the practical implications of this arguments, let us consider the following issues:
1) definition of “residence”.
It varies from country to country, and is a sovereign decision. In the case of St. Vincent and the Grenadines, it includes a person “whose permanent place of abode is in St. Vincent and the Grenadines, and that is physically present therein for some period of time in the basis period for that year of assessment” (as mentioned in the information provided by the SVG government to the OECD). Crucially, it does not define the length of such “period of time”. This implies that a foreigner acquiring property in SVG and obtaining a residency permit there, could be considered a tax resident of SVG even if he/she does not spend the greatest portion of the year there.It could be wise to improve the terms of the definition following the example of Barbados, that defines as resident “an individual who has a permanent home available for his use and declares an intention to reside there for at least two consecutive income years”, thus making tax residency dependent on the availability of a home and a mere declaration of intention to reside there.
2) tax implications of residency.Let us consider how the issue is handled in Barbados: individuals who are “ordinarily resident” but not domiciled in Barbados, are only taxed on the income produced or remitted to Barbados. Explicitly introducing the same principle in the St. Vincent tax code,and specifying that aliens obtaining SVG citizenship will be considered as “non domiciled” unless, after a certain number of year of residency, they request to be considered domiciled in SVG. The combination of this two very simple clauses would make SVGTax residency very attractive and legally solid for foreign applicants. It would cause no significant losses to the treasury, given revenue from foreign source incomes is already practically irrelevant. A lump sum annual minimum tax supposed to cover remittances could indeed generate permanent additional revenue for the SVG treasury.
In conclusion: if the expected new legislation planned this year to regulate the registration of aliens as SVG citizens will require as first step the acquisition of a property suitable for a permanent home, with a minimum value in line with existing regional standards, obviously subject to the payment of the existing alien licence tax, and establish that such acquisition grants a right to obtain a permanent residency permit, subject to a positive conclusion of a rigorous due diligence process vetting possible criminal backgrounds,
and adding that aliens obtaining such permanent residency permit can ask to register as citizens of SVG, by paying a fee covering the cost of the required due diligence, I believe the offer would be much more attractive that the existing alternatives offered by the other OECS countries.Obviously, prior informal consultation of the EU commission and Canadian authorities on the matter could provide useful guidance to secure the continuation of the existing visa free entry rights in Europe and in Canada for SVG citizens.