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Citizenship by Investment

St. Kitts Continues to Fight Corruption – Fires CEO of SIDF

The chief executive officer at the St Kitts band Nevis Sugar Industry Diversification Foundation (SIDF),
Terrance Crossman, has been terminated following an in depth investigation into the SIDF.

After being subject to heavy criticisms for years due to lack of transparency and accountability, the Kittian government launched an investigation into the SIDF. This investigation was a promise made by the Team Unity administration and now Prime Minister Dr Timothy Harris prior to the 2015 elections.

The dismissal of the SIDF CEO was announced just days after Prime Minister Dr Timothy Harris indicated during a press conference that ongoing investigations into the foundation were just about completed and the SIDF will soon be brought under Parliamentary scrutiny. In the spring of  2015, Harris noted that the review of the SIDF operations over the period 2010-2014 had revealed some troubling initial findings.

“The review has revealed that the SIDF was operated in a manner unbecoming of a multi-million dollar entity. The board of councilors and senior management operated with scant regard for proper procedures and best practices expected of those with fiduciary responsibilities,” Harris said.

While the details pertaining to Crossman’s termination were not announced, nor were the precise details of the investigation’s findings, Harris noted that there was a large absence of control at the SIDF, and that the organization had not produced audited financial statements since 2013. The SIDF CEO seemed to have lost control over the funds of the SIDF.

The Sugar Industry Diversification Foundation (SIDF) is a private organization that earns money through the sale of St Kitts-Nevis citizenships. The organization was touted by former PM and now leader of the opposition, Dr Denzil Douglas. The private organization outside scope of government oversight amassed hundreds of millions of dollars through granting citizenships, which are  a national commodity and privilege.

St Kitts-Nevis’s citizenship programme has received some criticisms in the past due to corruption, and this latest move suggest that the current government is making good on its promise to clean-up the programme.

Cypriot Citizenship Scheme Revamped

The Cypriot citizenship scheme is now even more interesting thanks to recent changes that will make the program accessible to an even wider range of investors.

Changes in the Cypriot Citizenship Scheme

The biggest change in the Cypriot Citizenship Scheme is a significant reduction of the minimum investment amount to €2 million, from €5 million, plus a residential property worth at least €500,000 plus VAT in value. In cases where the applicant invests at least €2 million in one or more residential properties then the applicant is not required to purchase another residence. On privately used residential property a reduced VAT rate applies. The requirement to hold the investment for a period of at least three years has not been altered.

Parents can now be included in citizenship application

Another significant change to Cypriot citizenship scheme is that an applicant’s parents can now apply for citizenship through the same application, provided they purchase a permanent residence in Cyprus with a value of at least €500,000 plus VAT. The investors children up to the age of 28 can still be included to the citizenship application.

Collective investment scheme has been abolished

Another adjustment to the application procedure facilitates individual processing. Previously, investors could settle an application with a reduced investment amount of €2.5 million if it was processed as a group of five investors due to the requirement for collective investment applications of at least €12.5 million. This led to delays until there were enough applicants to form a group that met the minimum investment requirement. Cyprus boasts the fastest citizenship program of EU countries; qualified applicants may receive approval within 90 days of submitting their necessary documents.

Already submitted applicants will not be affect by the changed; however, applicants who would prefer that their applications are processed with the new rules can re-apply based on the new conditions. Until end of October 2016, applicants may still apply under the old rules, but starting form November 2016 applications under the Cypriot Citizenship Scheme may only be settled under the new rules.

These latest changes make Cyprus’s Citizenship by Investment Programme even more attractive, not that the program needed help in the first place. Cyprus is a popular migration destination due to its mediterranean locale, safety, excellent infrastructure and education and healthcare system. The country also has low tax rates.

Not only is the application procedure quick, it has other characteristics that help investors in their transition to being a citizen of Cyprus.  Citizenship applicants are granted a Residence permit until they secure their passport and the application procedure allows for simultaneous submission of residency and citizenship applications. There are no physical residency requirements. Citizens of Cyprus also have the unrestricted right to live, work and study in the European Union (EU) and to own property in an EU member state. Cyprus does not require applicants to relinquish other citizenships.

International Monetary Fund Confirms Positive Impact of Citizenship Program for St. Kitts and Nevis’s Economy

The Citizenship by Investment program for St. Kitts and Nevis has had a considerable, positive impact on the country’s economy; according to the International Monetary Fund. It has contributed to GDP growth and reduced the country’s debt. Now, the challenge is for St. Kitts and Nevis to maintain the interest in the program that has been such a positive driver on its economy.

The International Monetary Fund Praises St. Kitts & Nevis’s Economic Development

St. Kitts and Nevis successfully exited the International Monetary Fund’s (IMF) Post-Program Monitoring Framework in October 2015, a requirement for countries that borrow money from the International Monetary Fund. To successfully exit the program, St. Kitts had to prove that is economy had shown improvement; that it was on stable footing. The IMF found that St. Kitts had favorable macroeconomic performance and a broadly stable financial system, and country’s economy continued its strong growth at around 5%. The International Monetary Fund attributed this strong growth due to surging inflows from the country’s Citizenship by Investment (CBI) program, with large CBI inflows in the 2013-2015 period, although the IMF noted a slowdown in 2015.

Money obtained from the economic citizenship program resulted in increased construction, and spending in other categories and this helped St. Kitts economy post significant growth, but with the slowdown of CBI inflow starting in mid-2015 there are concerns that the CBI inflow will not continue to support the same level of investment inflows.

The IMF has cautioned, that when looking at forward economic expectations for the Kittitian economy, the performance will depend on developments in the citizenship program, with the country’s future growth highly dependent on CBI inflows. The IMF forecasts St. Kitts growth will moderate to 3.5% in 2016 and then will average 3% in the following years as construction activities stemming from CBI-related spending taper off, while CBI applicants normalize following the past increase in interest.

The decline in new CBI applications in mid-2015 was due to a few factors, including: the negative impact of the loss of visa-free access to Canada and the US FinCEN advisory, which led to a temporary uncertainty regarding the reputation of the citizenship program, increased competition from other programs, such as the Maltese Individual Investor Programme introduced in 2014 and the Vanuatu Economic Rehabilitation Program which started in 2015. For those reasons the country is advised to continue to work on its CBI program, and make it more attractive in the face of increased competition from other programs.

The Economic Future of St. Kitts & Nevis

But, even if the CBI investment inflows slow, they already had a positive impact on the economy. The cash inflows increased spending on infrastructure, and improved the country’s finances. According to the International Monetary Fund, St. Kitts debt-to-GDP ratio continued its downward trajectory in the 2013-2015 period at it is expected to reach the East Caribbean Currency Union’s 60% target in 2017, before its peers, a major positive development for the country’s economy. The citizenship program in St. Kitts & Nevis brought several hundreds of million US$ foreign direct investments into the luxury tourism industry which has been established during the last decade. The islands of St. Kitts & Nevis have already seen a huge increase of tourists to the country and this should continue during the next decades.

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