Montserrat Taxation

Tax considerations

Investor considerations

The bulk of government revenue comes from direct taxation.
Resident individuals are assessable to a personal income tax.
Capital gains are not subject to taxation.
Tax incentives are available.

International Business Companies are not subject to income tax laws

Principal taxes

The bulk of Montserrat’s revenue comes from direct taxation, comprises consumer tax, import duty, stamp tax, personal income tax and hotel and guest taxes. Direct taxes are levied on corporate income, business income resident and nonresident individuals’ personal income.

Tax guarantees

Residents pay personal income tax. International Business Companies under the The International Business Companies Ordinance No. 19 of 1985 are exempt from Income Tax.

Individual companies falling under the Hotels Aid Ordinance, the Fiscal Incentives Act or specific concessions for other reasons would be granted tax concessions for a fixed period and these would be documented by the Executive Council.

Legislative framework

Statute law

Legislation governing taxation is passed by Executive Council in the same way as any other legislation.

Case law

There is very little case law relating to taxation in Montaserrat. Reference is made to U.K. case law. More often, any anomalies or misunderstandings of the legislation are discussed between the taxpayer or his representative and the Comptroller of Inland Revenue, and an interpretation agreed upon; this forms a precedent. In some cases, the Commissioner may issue notes for the guidance of tax advisers and businesses.

Anti-avoidance

Transactions will be disallowed in respect of schemes that have no commercial justification other than tax avoidance. For example, if a nonresident carries on business with a resident and exercises substantial control over the resident and business is arranged so that the resident makes little or no profit, the nonresident may be taxed on the ordinary profits that might be expected to arise from that business.

Income tax

Concepts of income taxation
The system is basically a unitary one that provides for the aggregation of all income accruing in or derived from Montserrat or elsewhere.

Classes of taxpayers

Taxation laws cover corporations, nonresident individuals, branches of foreign corporations, and others. A partnership is not taxed as an entity, rather the income from the partnership is taxed in the hands of the individual partners.

Resident individuals are subject to income tax. Resident individuals are generally those physically present in Montserrat for at least 183 days continous, in a year or those whose permanent place of abode is in Montserrat and who are physically present therein for some period during the year.

Taxable income

Taxable income comprises gain or profits from any trade or business.

Capital gains are not subject to a separate capital gains tax, nor are they liable to tax as ordinary income.

Tax year

A tax year is basically January to December and may be altered subject to the agreement of the Comptroller of Inland Revenue.

Tax-free zones

There are no tax-free zones in Montserat.

Tax holidays

Qualifying investors are eligible for tax holidays of up to 15 years, which under certain circumstances may be extended.

Capital taxation

There is no capital taxation in Montserrat.

*International aspects

Foreign operations

Unless exempted, branches or subsidiaries of foreign corporations are taxed in Montserat on the total income of the branch or subsidiary. If this income includes income from overseas, a credit for overseas taxes may be applicable depending on the territory.