During an event hosted in St Kitts and Nevis last week, an Ernst & Young (EY) tax specialist reiterated the importance of grasping the difference between citizenship and tax residency – a mistake still commonly made by journalists and lawmakers unfamiliar with the concept of citizenship by investment (CBI).
EY tax managing partner for the Caribbean Wade George attended the Caribbean Investment Summit and explained during his address why Caribbean programmes such as that of St Kitts and Nevis do not pose a risk to tax evasion, including Common Reporting Standards (CRS).
This is largely because economic citizenship in St Kitts and Nevis, for instance, does not qualify a person for tax residency, unlike other countries where the eligibility may be automatic. In a report released in March, EY detailed why one's Caribbean citizenship is irrelevant to one's tax-paying obligations, which are, in fact, ‘built around the degree of personal socio-economic links with a country’.
The confusion often stems from the failure to distinguish between citizenship and residency programmes – two entirely distinct concepts that, by virtue of law, serve different purposes. St Kitts and Nevis offers a 'Citizenship by Investment Programme', not a 'residency' one, which are far more common, particularly concentrated in Europe, with most EU member states operating one.
During his keynote address at the same event last week, the Prime Minister of St Kitts and Nevis, Timothy Harris, explained that the reason why his country's CBI programme – the oldest in the world – is still running successfully 35 years since inception, is because its foundation was built on carefully selecting applicants in order to preserve the programme's integrity in the long run. "We are grateful to Ernst & Young for its work on CBI and its findings that our regional CIPs [citizenship by investment programmes] are not avenues for tax evasion," noted Harris. "We want persons not just of high net worth, but of high integrity and excellent character to become part of our citizenry."