Wade George
Tax Director
Ernst & Young
Colin Ramsey
Senior Manager
Ernst & Young
Nassim Mohammed
Senior Manager
Ernst & Young
The Impact of Withholding Taxes
on Investments in the Region
The levying of withholding taxes on payments to non-residents is a common
feature of taxing statutes in the Commonwealth Caribbean. Bearing in mind
that the statutory rates of withholding tax in the region can be as high as
33 1/3%, withholding tax should be of crucial importance when foreign
investors are evaluating the cost of doing business in the region.
A non-resident entity may be subject to either income tax/
corporation tax or withholding tax on income derived from
within the jurisdiction. Generally, an entity would be subject
to income tax/corporation tax where it is engaged in a trade or
business in the jurisdiction or where it has a taxable presence
therein such as a branch or other fixed place of business.
On the other hand, payments to a non-resident would be
subject to withholding tax where such non-resident is not
trading in the jurisdiction or otherwise has no taxable
presence therein. In this regard, it should be noted that
income tax/corporation tax is levied on a net basis (i.e.
after deducting all relevant expenses and allowances) while
withholding tax is generally due on the gross amount of the
payment without any deduction.
While the onus is o