| Montserrat Investment Guide |
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| Montserrat Investment Guide |
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Foreign Investment and Trade Opportunities
Investor considerations
Tax holidays and ready repatriation of capital and profits.
Positive attitude of local persons and businesses.
Preferential trade agreements.
Good international communications.
Government attitude toward foreign investment
The Government of Montserrat welcomes new private foreign investment.
Foreign investors are permitted to acquire real estate property, subject to the acquisition of a license, Alien Land Holding license.
Trade policy
The policy is towards free trade, although import licenses are required for some products.
Taxation policy
Foreign investment is treated in the same way as local investment, and tax holidays and other incentives are available to any qualifying operation.
Foreign investment is welcomed by the government and the local business community. Joint ventures between foreigners and local persons are not uncommon.
Foreign investors are generally regarded as being desirable employers.
Special investment opportunities
The preferential trade agreements with the United States, Canada, Europe, and other parts of the Caribbean open up an enormous potential markets.
The government's positive attitude, willingness to grant incentives and general support all help create the right climate for investment in Montserrat.
Planning guide for the foreign investor
National and local government policy considerations
Foreign investment is welcome. The incentives provided include tax holidays, duty-free imports, and the right to repatriate investment and profits. The main restrictions relate to land ownership, where a license has to be obtained the Alien Land Holding License.
Investment possibilities/restrictions
Investment possibilities exist in the various aspects of Montserrat’s economy. It is not a requirement to have a local partner in a business venture.
Prior approval or registration
All foreign-owned enterprises require the government's approval to trade in Montserrat, and the Executive Council will have to approve any fiscal incentives.
Possible business structure
Usually a local company is incorporated, but business may be conducted as a branch, joint venture or partnership, or as an individual.
Setting up or acquiring
The recommended route for a foreign investor is to make a proposal directly to the Minister of Finance and Economic Development.
Investment incentives
Investment incentives cover income tax, import duties and exchange controls. These are available to all foreign investors.
Location/industries
Export-oriented manufacturing, agricultural projects, Tourism and e-commerce are of particular interest to the government.
Repatriation of capital and profits
The incentive packages provided generally allow ready repatriation of capital and profits.
Labor
Although unemployment is low, labor is available either locally or from neighboring islands.
Information and assistance
Full information on foreign investment in Montserrat can be obtained from Appendix 1
Investment incentives
Investor considerations
A tax holiday of 5 to 10
years is available, periods of up to 15 years maximum under
certain circumstances.
Export-oriented businesses are eligible for tax rebates.
Relief is given from customs duties and other indirect taxes.
Work permits are provided for foreign nationals.
Trade bloc memberships include: Caricom, CBI, European Union and Caribcan.
Investment policy
The main thrust of the government's incentives policy is to stimulate growth and expansion in the economy.
All types of investment are encouraged, with the ultimate goal of achieving economic growth and full employment in the economy.
Tax Concessions
Tax holidays are offered to
qualifying ventures in Montserrat, subject to approval by Executive
Council.
A company exporting to countries other than the East Caribbean Common Market ( Antigua & Barbuda, Dominica, Grenada, St. Kitts & Nevis, St. Lucia, St. Vincent, and the Grenadines) Is entitled to a tax rebate depending on the percentage of profits attributable to exports. Businesses which are granted tax holidays may take advantage of this provision.
Industries affected
Manufacturing enterprises are offered incentives under the Fiscal Incentives Odinance 1975.
Hotel construction and extensions are given incentives under the Hotels Aid Ordinance and the Income Tax Act.
All other enterprises that the government wishes to encourage are considered on their merits and granted such concessions, as the Executive Council deems appropriate.
Fiscal Incentives Ordinance 1975
This ordinance classifies five types of enterprises which qualify for tax holidays. The length of the first three depends on the amount of value added in Montserrat. The fourth type an enclave industry, produces exclusively for export outside the CARICOM region. Capital intensive industry where capital investment is not less than US$9.25million is the fifth classification.
Generally tax holidays are granted for periods of five to ten years, although longer periods of up to fifteen year maximum may be negotiated depending on the nature of the investment. The performance of the investor is reviewed after the incentives have been granted. The first review
Is conducted three years after the commencement date and the subsequent reviews take place at two year intervals until the expiration of the tax holiday.
The Hotels Aid Ordinance grants exemption from customs duties on all imports of building materials, machinery, equipment, and furniture for the construction or extension of hotels.
Under this legislation, the investor may also benefit from a tax holiday of up to five years. For five of the following eight years, the investor may offset up to one-fifth of the incurred capital expenditure against future income. Losses incurred during the tax holidays may not be carried forward against future profits.
Additional incentives
Apart from incentives covered under the above statutes, the government will grant additional incentives in certain circumstances. Subject to the approval of Executive Council.
Investment incentives
Government’s Fiscal Policy is integrated into the broader economic policy of recreating an environment to enable and encourage new private sector investment in the North of the island.
Restrictions on foreign investment and investors
Investor considerations
Capital and earnings can be repatriated.
Hundred percent foreign ownership is permitted.
A wide range of enterprises is available for investment.
Joint ventures with local persons are encouraged but are not essential.
An exchange levy of 1.75 percent is charged on outward movements of currency unless exemption has been given
Land purchases require an alien landholders license.
Regulatory climate
Exchange controls are administered by the Ministry of Finance. Applications for foreign currency are dealt with by the Financial Secretary.
Exchange controls
Approval must be granted for the operation of a foreign currency account to avoid inward movements of foreign currencies being converted into Eastern Caribbean dollars.
Registration of foreign capital
For Exchange Control purposes, inward movements of currency may be registered with the Ministry of Finance as being approved for subsequent repatriation. Local commercial banks will assist the foreign investor in arranging registration.
Currency accounts
Subject to Exchange Control approval, a local or foreign company or individual may open an account in a foreign currency (generally U.S. dollars) if he can demonstrate a particular need for so doing. Tourist-oriented industries are generally treated favorably, but the accounts must be serviced with funds from abroad.
Repatriation of capital and earnings
Repatriation of capital is normally approved at the time a foreign investor makes his investment in Montserrat. In the absence of such approval, it may be obtained on exit and this does not generally present a problem.
Payments of interest, dividends, royalties, service fees, etc., require Exchange Control approval, which will be granted provided the Financial Secretary is satisfied that any relevant income taxes or withholding taxes have been properly accounted for.
A 1.75 percent foreign exchange levy is payable on purchase of foreign currency unless specific exemption has been granted. Exemptions are usually granted to an approved enterprise under the Fiscal Incentives Act 1975.
Limitations on imports
There are no Exchange Control limitations on the kinds of goods that may be imported.
Surrender of proceeds of exports
Export proceeds must be converted into local currency unless a foreign currency account has been approved.
Limitation on exports
There are no limitations on the kinds of goods that may be exported . Export credit terms are not prescribed by regulation.
Restrictions on foreign investment
Industries closed to private enterprise
The only enterprises that are wholly in the public sector are the administration of the public utilities, i.e., electricity, water, the airport and seaport. Fuel is presently being administered by the Government, but privatization is being considered.
Restrictions on foreign ownership
Joint 'ventures are encouraged and local partners can be extremely useful with their knowledge of local conditions.
Approval must first be obtained, but up to 100 percent foreign ownership of enterprises is permitted.
Investment in land
There are normally no restrictions on the purchase of property in designated areas. However, before land is purchased an Alien Land Holding License must be obtained from the Ministry of Agriculture, Trade & the Environment. This can be done with the assistance of a local attorney. Arrangements for the purchase of land can be made through one of the local Real Estate Agencies.
Effect on foreign investment
The government is very conscious of investors fears of exchange controls and the damaging effect of these to their investment plans. To overcome these fears, exchange control concessions are usually, granted to potential investors and should not be seen as a serious barrier to doing business in Montserrat. It is only in exceptional circumstances that any kind of restriction is placed on the movement of funds. The safest approach is to get the position clarified from the outset and to ensure that permission is granted to repatriate the original investment plus any profits arising therefrom. All funds transfer to Montserrat should be handled by a local bank.
Funds of over EC$250,000.00 permission is sought from The Ministry of Finance for purchase.
