BANKS AND TRUST COMPANIES
NEVIS OFFSHORE BANKING ORDINANCE, 1996
Rounding off the Nevis offshore financial services offerings is the Nevis Offshore Banking Ordinance, 1996. The aim of the legislation is to encourage the development of Nevis as an offshore banking financial centre and to provide incentives by way of tax reduction, exemption and benefits for offshore banking carried on within Nevis. The banking legislation is comprehensive with a strong built-in regulatory framework to ensure that a bank licensed under the legislation can be properly monitored to safeguard depositor's funds and ensure that the bank maintains acceptable accounting standards and satisfies capital requirements.
GRANTING OF A LICENSE
To deter the establishment of brass plate banks and to protect the reputation of the jurisdiction, Section 6 of the ordinance provides that no license can be issued to an individual. Licenses are granted only to eligible subsidiaries of local banks incorporated under the Domestic Banking Act or qualified foreign banks. A qualified foreign bank is defined as a bank with adequate capitalization and assets that is licensed to conduct domestic banking in its jurisdiction of incorporation, or a financial institution that is directly or indirectly a wholly owned subsidiary of a foreign bank.
Once an application is made and all requirements are satisfied, a license will be issued to the successful applicant upon the payment of the appropriate licensing fee.
TAX ON PROFITS OF OFFSHORE BANKS
Taxation on profits of an offshore bank doing business in Nevis are assessed on a reducing scale and governed by the banking legislation. Currently, taxes on profits are as follows;
Profit in ECD (000,000) Tax Rate %
Up to $10 2.5
$10 up to $20 2.0
$20 up to $30 1.5
THE NEVIS OFFSHORE BANKING (AMENDMENT) ORDINANC, 2000
On November 8 2000, the Nevis Island Assembly enacted the Nevis Offshore Banking (Amendment) Ordinance, 2000. The amendment rests all regulatory jurisdiction over offshore banks in the hands of the Eastern Caribbean Central Bank (ECCB). This action addresses the concern of the FATF, the CFATF and the FSF with regard to the need for increased supervision of financial institutions.
Under the Nevis Business Corporation Ordinance 1984, a international business company using the words Trust Company in its name may be incorporated without disclosing beneficial ownership or obtaining government permission. Trust companies may administer trust assets or undertake related activities in Nevis but may not conduct public business or operate locally in Nevis. The management of offshore trust assets may be done in Nevis or elsewhere without incurring tax liability in Nevis.
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