Taxation

them. The Minister of Finance is politically responsible for the correct levying of taxes. Before taxes are implemented on the island, the St. Maarten Parliament must approve

Profit Tax (Corporate Income Tax) A levy of Profit Tax is applicable to corporations as public- and private limited liability companies, limited partnerships, other companies and associations whose capital is divided in shares, cooperatives, mutual guarantee companies, and associations whose capital is not divided in shares, foundations, private fund foundations and trusts that take aim at profit making. The on-shore activities will be considered for tax and the off-

shore activities will be exempted. The law provides various incentives in order to stimulate investment. These incentives include credits on investments, depreciation acceleration, and tax holidays. (The latter is elaborated on in the tax holiday section of incentives).

WAGE TAX AND INCOME TAX

Wage tax is based on a P.A.Y.E. (Pay As You Earn) system. The employer has the responsibility of deducting wage tax and premiums from the salaries of employees and paying these amounts to the Island Receiver. Income tax is the summary of wage taxes and taxes on any other form of income. Wage tax is viewed as a pre-payment of income tax and is therefore deductible. Below is a table of income tax rates based on an

annual income.

The abbreviations A.O.V. and A.W.W. stand for “General Old Age Insurance” and “General Widow’s and Orphan’s insurance”. Both employer and employee have to contribute to social security premiums. The percentages are:

PREMIUM EMPLOYER EMPLOYEE

A.O.V. 7% 6%

A.W.W. 0.5% 0.5% The A.O.V / A.W.W. premiums are paid to the Social Insurance Bank (hereafter: SZV).

MEDICAL INSURANCE PREMIUM ZV/AVBZ

The abbreviations ZV/AVBZ stand for “Health Insurance”

and “General Insurance on Special Medical Expenses”. The premium for health insurance is 12.5% and is divided in 8.3% employer contribution and 4.2% employee contribution. The AVBZ is a social insurance against risks that are difficult to insure. This regards illnesses of long duration (chronic), long hospitalization, psychiatric nursing, relief and care of mentally and physically handicapped persons. The premium is 2% of the monthly salary and is divided in 1.5% on the account of the employee and 0.5% on the employer. Just as the wage tax, the employee contribution of the ZV and AVBZ is deducted from the salary of the employee and together with the employers contribution is paid to the SZV and the Receivers respectively.

TURNOVER TAX (TOT)

Turnover Tax is a tax on business-sales realized by entrepreneurs or businesses in accordance with their business. This tax is an indirect tax with the character of a

consumption tax and is not imposed on imports.

EXEMPTED ARE AMONG OTHERS:

• The deliveries of goods and rendered services by entrepreneurs/businesses in the off-shore sector; • The delivery of immovable properties as far as transfer tax (4%) is paid; • The services of banks and other financial institutions for

banking and financial performances with the exception of loans and mortgages, the transfer of money, the saving of stocks and shares and other papers of value; • The services rendered to entrepreneurs/businesses in the off-shore sector performed by lawyers, legal and tax advisors, accountants, consultants, and notaries;

• Turnover realized on transport services by aircraft or sea vessels.

THE TURNOVER TAX RATE IS 5%:

• Exempted are certain basic necessities (see article 17 of the Turnover tax Ordinance). • Turnover realized by hotels (for the part of rental of hotel rooms and apartments) are exempted insofar as room tax is paid over the entire revenue of the rentals. • There are several other exemptions mentioned in article 8 of the Turnover Tax Ordinance.

TAX TABLE ST. MAARTEN 2017 Income more than But not more than Tax For each amount above the income mentioned in column I

I II III IV

0.00 31,390.00 47,086.00 65,397.00 98,093.00 138,638.00 31,390.00 47,086.00 65,397.00 98,093.00 138,638.00 0.00 12,5% 3,923.77 20% 7,062.75 26,25% 11,869.27 33,75% 22,904.40 40% 39,122.35 47,5%