TAXATION

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 them.

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 offshore 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:

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

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

Incentives

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Tax Holiday

St. Maarten boasts an ideal climate for foreign investment and investment services, offering tax incentives for firms wishing to invest or establish companies to process their investments abroad.There are three areas of development that are specified for which a Tax Holiday can be considered.

• Hotels and other Rest & Recreational Accommodations

• Land Development

• Industrial

THE SPECIFIC CONDITIONS THAT APPLY TO EACH AREA ARE:

HOTELS AND OTHER REST & RECREATIONAL ACCOMMODATIONS

• The application for the tax exemption must be for the exploitation of a hotel or other rest & recreational accommodation;

• The company mentioned above must be geared towards the enhancement of foreign visitors;

• The construction and primary furnishing should encompass an investment of at least $561.798;

• The company is expected to contribute to the broadening of the economic base of St. Maarten;

• There must be a minimum of 25 rooms with a surface space of at least 30 square meters each;

The above mentioned conditions are cumulative; the tax exemption will only be honored if all the conditions have been met.

Land Development

• There must be a minimum investment of $1.100.000 excluding the value of the land;

• The land must be fallow;

• The minimum size of the parcel of land must be 2.5 hectares;

• A road and other infrastructural facilities such as plumbing, water and electricity must be installed;

• Real estate must be developed;

• The company must stimulate economic activity in St. Maarten;

• The company must stimulate employment in St. Maarten;

• The company’s goal must be land development. These requirements are also cumulative.

Industrial

• There must be a minimum investment of $83.303.330;

• The company is expected to contribute to the broadening of the economic base of the island; incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives incentives

• There must be a creation of permanent employment of at least 5 persons, excluding board members.

• There must be a creation of permanent employment of at least 5 persons.

These requirements are also cumulative.

Application Procedure

• The request for tax exemption should be submitted on a form, which has been approved by the Governor. This form can be acquired from the Directorate of Taxes on the island.

• The form must be filled out completely, a stamp attached, and forwarded to the Governor. Only one application per form is allowed. Incomplete forms will be rejected.

• The application must contain:

- Data on the amount of employment the project will generate specified by local and foreign.

- Information on financing methods; whether funds will be acquired locally or internationally.

Incentives

• A detailed business plan including description and feasibility study of the project.

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• Other relevant material such as maps, drawings, or any other aid deemed relevant for illustration or clarification may be annexed.

• The interested party will be given the opportunity to conduct an oral presentation of the project to the St. Maarten Tax Holiday Committee.

The Committee will then forward its advice to the Council of Ministers who in turn advises the Directorate of Taxes. The Directorate of Taxes will then make the final decision and the candidate will be notified.

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On July 5th, 2010, the statistics responsibility was transferred to St. Maarten in preparation for its new constitutional status which was successfully realized on October 10, 2010. The Department of Statistics (STAT), is the entity officially charged with the collection, analysis and dissemination of statistical information for the new country St. Maarten. This task was formerly the responsibility of the Central Bureau of Statistics (CBS) of the former Netherlands Antilles.