Taxation in St Helena

St Helena is a small territory in the South Atlantic Ocean. It is a dependent territory of the United Kingdom. This means that it has its own legislation, including tax law. It has close links to South Africa. In fact, the only commercial flights to the island are from South Africa.

It has a very small, and reducing, population, which is now just over 4 000 people. The language is English, the currency is the St Helena Pound (which is worth the same as the UK pound, which also circulates in the territory), and traffic drives on the left.

As well as the land mass, St Helena has territorial waters which extend 12 nautical miles from the coast, and an exclusive economic zone which encompasses waters within 200 nautical miles from the coast.

We thought it might be interesting to write a summary of the territory’s tax laws, as it can be considered to be “African.”. The Income Tax Ordinance (or law) is available on the internet, and the Government of St Helena’s website has some useful material and links to documents about income tax.

Types of tax in St Helena

St Helena imposes income tax (on individuals and companies and other bodies), capital gains tax. It also imposes customs duties (normally either 5% or 20%), excise duty (on foods with added sugar, and single use plastic bags, for example), liquor duty, and services tax (which applies to insurance and telecommunications services at the rate of 10% of the service fees charged. Services tax does not apply to life or funeral insurance policies but applies to any person who provides these services in or from St Helena).

There is no VAT or sales tax.

Income Tax

The normal rate of tax for companies is 25%.

The normal rate of tax for individuals is 26% for income up to £ 18 000, and 31% on income that exceeds £ 18 000 per year.

There are reduced rates for certain industries which the government hopes to encourage. These industries include:

• Export of goods and services
• Fishing and fish processing
• Growing and roasting of local coffee
• Farming of vegetables, fruit, nuts, and meat, butchery of meat, and processing of locally grown vegetables, fruit, and nuts.
• Distilling and brewing of liquor, wine or beer.
• Cultivation of honey
• Production of upholstery and clothing, and
• Production of traditional craftwork or jewellery using predominately locally sourced inputs which are grown, mined or recycled in St Helena.

The tax rates applying to income from these industries are 15% for companies, and 5% lower than the normal rates for individuals.

Income tax is administered by the Commissioner of Income Tax and their staff, who work for the government of St Helena. So, this is not a “stand alone” revenue authority as now exist in many countries. There is a separate Collector of Customs, managed by the Head of Customs and Immigration.

Dividends are taxed at 8% if they are received by individuals, with a reduction if that person’s total income if less than £ 18 000. For companies, dividend income is taxed at zero percent. The overall effective rate for an individual shareholder in a company is therefore 31%, on the portion of a company’s profits that are distributed, if the shareholder has income of more than £ 18 000.

Interest from a financial institution in St Helena is taxed at 10%, by way of a final withholding tax.

Income tax is collected from employees through a PAYE system.

Resident Individuals are granted a tax-free personal allowance of £ 7 000 per year.

St Helena charges tax on a “territorial basis.” For income from self-employment, trade or business, this means that income is taxable if it arises from an activity carried on in St Helena by a resident, a non-resident or a permanent establishment.

One way in which a foreign company can create a permanent establishment in St Helena is by providing services in or from St Helena using employees or other personnel in St Helena.

The tax year ends on 31 March. A person who prepares annual accounts to a different date can seek approval to file income tax returns for that year. The time for filing the tax return is 3 months after the year end.

There are some interesting features to the income tax. Some of these are:

• Loans to shareholders of a company can be taxed as a dividend, if the Commissioner is not satisfied that they are a bona fide investment.
• The net gain on satisfaction or cancellation of a debt is taxable.
• Business losses can be carried forward without a time limit.
• An expense is not allowed as a deduction if it is not supported by a valid Tax Invoice.
• Transfer pricing. Transactions between associates must be at an arm’s length price, but there is no guidance in the law as to how this is price is established or supported.
• Trusts. Beneficiaries of the trust are taxed on amounts that accrue to that beneficiary. Other income is taxed in the hands of the trustees, at the tax rate that applies to persons which are not individuals.
• As expected, the Ordinance provides for penalties. As examples, underpaying tax due to a deliberate error can result in a penalty of 75% of the tax. If the error was due to carelessness, the penalty is 20%. The penalties can be reduced by 10% in the case of a voluntary disclosure and can be increased by 10% for repeated instances.
• Directors of companies can be held personally liable for defaults by a company.

Capital Gains Tax

Capital gains are taxed at 10% of the net gain, if the asset has been owned for more than 3 years. Capital losses can be offset. A gain on disposal of a person’s principal place of residence in St Helena is exempt. There is also a capital gains exemption of £ 2 000.

Capital gains tax is charged on the gains arising from the disposal of land, interests in land, buildings, and interests in a business (which we understand includes shares), if the asset was owned by the taxpayer for at least 3 years. However, gains or losses on the disposal of business capital assets (other than those subject to capital gains tax) are taxed as part of the business income, at income tax rates.

Gains arising on the disposal of an asset can be “rolled over” if the proceeds are reinvested in a similar asset or assets to the one disposed of, within 2 years. This roll-over can only occur once, so if the “new” asset is later disposed of, the gain cannot be rolled over again into a new asset.

Capital gains tax seems to apply to a disposal of assets wherever they are situated, rather than just on those located in St Helena.

St Helena does not have an inheritance tax or estate duty on death.

Comments

Tax rates for both companies and individuals are lower than in many countries. The reduced rate for types of business that the government wants to encourage is also more attractive, while it should be high enough to avoid “top up” Pillar 2 taxes being applied in other countries.

The territorial base of taxation may also be advantageous in some cases.

The absence of VAT or sales tax also creates a much lower tax compliance burden than in most countries. The lack of inheritance tax or other death taxes may also be attractive.

Anybody who is a director of a company in St Helena should pay great attention to the company’s tax affairs, and should probably ensure that they are covered by adequate insurance against Directors’ liabilities.

However, the island has a very small population and economy, which must greatly restrict opportunities. Transport to St Helena is also limited, often to a flight to South Africa once per week, although this is increased at some times of the year.

On a quick reading of the Income Tax Ordinance, it seems that a foreign person will only be taxed in St Helena if it has a permanent establishment in the island. However, a more careful reading suggests that a foreign person could still be taxable, if it conducts an activity in St Helena. This might affect a foreign company exploiting St Helena’s Exclusive Economic Zone to catch fish commercially. It appears that such a company would be subject to income tax. If the fish were exported from St Helena, the tax rate would be 15%

Other islands

The Governor of St Helena is also Governor of two other British Dependent Territories. These are Ascension Island and Tristan da Cunha.

The population and economy of these other territories are even smaller than St Helena. Ascension Island has a population of some 800, and it is mainly used as a military base. The population of Tristan da Cunha is about 250.

Both Ascension Island and Tristan da Cunha have their own tax laws, rather than using those of St Helena. The currency in Ascension Island is the St Helena Pound, with the UK pound also circulating. The currency in Tristan da Cunha is the UK pound.

There is limited air service to Ascension Island, from the UK and St Helena. There is no air service to Tristan da Cunha, as there is no airport on the island.

Immigration is strictly controlled. There is no right to abode on Ascension Island, meaning that all inhabitants must be there for work purposes. Only people with family ties to Tristan da Cunha, or those filling fixed term highly specialised roles (such as doctors) can live there, and property cannot be acquired.

For completeness, we have set out a short summary of the income tax rules in each island.

Ascension Island

Individuals pay income tax at 15% on the first £ 6 000 of annual income, and 27% above that. They have an annual tax-free personal allowance of £ 3 500, plus some other allowances for dependents. Military personnel are exempt. Short term business visitors are also exempt if they are on the island for no more than 7 days and hold a Short-Term Business Permit.

The profit of five named companies is taxable at 18%. The profits of any other company is taxed at zero percent. From this, we conclude that profits from catching fish in the territorial waters of Ascension Island.

Tristan da Cunha

Individuals who are employees are taxed at 10% on income above £ 1 500, which increases to 13% for income above £ 3 000 per year. Income below £ 1 500 per year is taxed at zero percent.

Profit from trade or business is taxed at 10%. People are also required to pay a medical contribution of 4%.

As taxable income from carrying on a business is the amount that arises or is derived from Tristan da Cunha, this would include profits from exploiting the fish resources in the island’s Exclusive Economic Zone.

Final Thoughts

St Helena’s tax system may be relatively small in scale, but it is distinctive, structured and increasingly relevant for businesses engaging with the territory or its surrounding waters. Its territorial basis of taxation, absence of VAT, sector-specific incentives and clear income and capital gains frameworks create both opportunities and compliance considerations.

For organisations operating in, investing into, or transacting with St Helena, careful analysis is essential. These rules can materially affect structuring, tax exposure, cash flow, and governance obligations, particularly where permanent establishment risks arise.

If you need support in interpreting the regime, assessing your group’s position, or navigating cross-border implications, our team is well placed to assist.

Get in touch for tailored advice and ensure your organisation remains compliant, informed, and strategically positioned in this unique tax environment.