Suriname Individual Tax Guide

Suriname

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Please direct all requests regarding Suriname to the following persons in the Paramaribo, Suriname, or the Willemstad, Curaçao, office.

Paramaribo GMT -3

EY

Cornelis Jongbawstraat 17 Paramaribo Suriname

Executive and immigration contacts

Bryan D. Irausquin +599 (9) 430-5075

Email: bryan.irausquin@an.ey.com

Fong-Mang Cheong +599 (9) 430-5071

Email: fong-mang.cheong@an.ey.com

Kimberly N. Schreuders +597 7100-966

Email: kimberly.schreuders@an.ey.com

A. Income tax

Who is liable. Residents are taxable on their worldwide income. Nonresidents are taxable only on income derived from certain Suriname sources. Nonresidents are generally subject to personal income tax from their first day in Suriname. A resident individu al who receives income, wherever earned, from former or current employment is, in principle, subject to income tax in Suriname.

Residence is determined based on the applicable facts and circumstances, such as an individual’s domicile (the availability of a permanent home), physical presence and location of an indi vidual’s vital personal and economic interests.

Income subject to tax. The following are the principal types of income taxed in Suriname:

• Employment income

• Self-employment and business income

• Income from immovable property (rental income)

• Income from movable assets (interest and dividend income)

• Income from periodic allowances, provided that the allowances are dependent on life

Employment income. Taxable employment income consists of employment income, including directors’ fees and supervisory directors’ fees, less itemized and standard deductions and allow ances (see Deductions), pension premiums and social security contributions (old-age insurance contributions), whether paid or withheld.

Directors’ fees and supervisory directors’ fees are treated in the same manner as ordinary employment income and are taxed with the income listed above at the rates set forth in Rates. Directors’ fees and supervisory directors’ fees and paid by Suriname resi dent companies are, in principle, subject to withholding for wage

tax and for social security insurance contributions with respect to Suriname resident individuals.

Nonresident individuals receiving income from current or former employment carried on in Suriname are subject to income tax in Suriname.

Nonresident individuals employed by Suriname public entities or funds established by such entities are subject to tax on income in Suriname even if the employment is carried on outside Suriname. In principle, wage tax is withheld from individuals’ earnings.

Nonresident individuals receiving income as managing directors or supervisory directors of companies established in Suriname are subject to income tax in Suriname.

Self-employment and business income. Residents are subject to tax on their worldwide self-employment and business income.

Nonresidents are taxed on income derived from a business, pro vided that the income can be allocated to a permanent establish ment in Suriname. A permanent representative is regarded as a permanent establishment for Suriname income tax purposes.

Annual profits derived from a business must be calculated in accordance with sound business practices that are applied consis tently. Taxable income is determined by subtracting the deduc tions and personal allowances specified in Deductions from annual profits.

Profits attributable to a permanent establishment in Suriname are calculated in the same manner as profits of resident taxpayers.

Income from periodic allowances. In principle, resident individu als are subject to tax on their worldwide periodic allowances received, including old-age pensions, alimony payments and dis ability allowances, provided that the allowances are payable for the individual’s lifetime. Under certain conditions an exemption may apply.

In principle, nonresident individuals are subject to income tax on income derived from periodic allowances received from Suriname public entities or funds established by such entities.

Income from immovable property. Income derived from immov able property is subject to Suriname income tax. Income derived from a person’s residence is not taxed as income from immovable property. Various costs related to immovable property can be deducted from taxable income, such as interest paid on mortgage loans for the acquisition or the restoration of immovable property.

Nonresident individuals are taxed on rental income derived from immovable property located in Suriname or from the rights to such property.

Income from movable assets. Dividend and interest income derived from domestic and foreign sources, less deductions, are generally subject to income tax.

Nonresident individuals are taxed on interest income derived from debt obligations if the principal amount of the obligation is secured by mortgaged immovable property located in Suriname. Nonresident individuals are also taxed on income derived from participations in general or limited partnerships with their place of management in Suriname.

In principle, a 25% dividend withholding tax is imposed on divi dends distributed by resident companies.

Capital gains and losses. Capital gains are generally exempt from tax, and capital losses are nondeductible. However, in the follow ing circumstances, residents may be subject to income tax on capital gains.

Type of income Rate (%)

Capital gains realized on the disposal of business assets and on the disposal of other assets if qualified as income from independently performed activities

Capital gains on the repurchase of shares by the company in excess of the average paid-up capital

Up to 48

Up to 48 Capital gains on the liquidation of a business Up to 48 *

* In principle, the tax rate is up to 48%, but on request a tax rate of 25% is applied. The highest income bracket is taxed at a rate of 48% during the period of 1 February 2021 up to and including 31 December 2021. However, this rate should be discontinued as of 1 January 2022. As of 1 January 2022, the highest rate should be 38% again. However, the Suriname government announced that the amounts of the income tax brackets and the related rates will possibly be revised as of 1 January 2022.

Deductions

Deductible expenses. Residents may claim the following per sonal deductions:

• Mortgage interest paid that is related to the taxpayer’s dwelling (limited to interest payments on a maximum debt of SRD125,000).

• Exterior paintwork expenses related to the taxpayer’s dwelling (limited to once in three years).

• Under certain conditions, pension, annuity and other periodic allowance payments.

• Life-insurance premiums that entitle taxpayers to annuity, pen sion or other periodic allowance payments (up to a maximum of 10% of income).

• Alimony payments if they meet the threshold amount.

• Medical expenses, educational expenses and support for up to second-degree relatives if they meet certain threshold amounts.

• Under certain conditions, an amount up to SRD8,000 for a disabled child.

• Acquisition costs (also available to nonresidents) for taxpayers deriving employment income. The deduction is limited to 4% of the wage, with a maximum of SRD1,200, if specified expenses are paid under certain conditions.

Business deductions. In general, business expenses are fully deductible if the expenses are incurred in accordance with sound business practices. However, the deduction of certain expenses is limited.

Personal tax credits. A personal tax credit of SRD9,000 on an annual basis (that is, SRD750 per month) may be subtracted by a taxpayer from income tax due. This amount of SRD9,000 was introduced on 1 May 2020 and was applicable until 31 October 2020. However, it is now extended until the introduction of a new value-added tax system (which is expected 1 July 2022).

Rates. Resident and nonresident individuals are subject to income tax at the same progressive rates. The following are the individual income tax rates and tax brackets.

Taxable amount

Exceeding Not exceeding Tax rate SRD SRD % 0 2,646.00 0 2,646.00 14,002.80 8 14,002.80 21,919.80 18 21,919.80 32,839.80 28 32,839.80 150,000 38 150,000 48

The highest tax bracket has been introduced as a temporary soli darity charge valid up to and including 31 December 2021. Tax charge on special payments. Extra tax brackets have been introduced as a solidarity charge on irregular one-off payments related to employment. The following are the tax brackets.

Taxable amount Exceeding Not exceeding Tax rate SRD SRD % 0 11,356.80 5 11,356.80 19,273.80 15 19,273.80 30,193.80 30 30,193.80 147,354.00 35 147,354.00 45

The highest tax bracket has been introduced as a temporary soli darity charge valid up to and including 31 December 2021.

Relief for losses. Losses in a financial year may be carried for ward for seven years. No carryback is available. Losses incurred by businesses during their first three years of business may be carried forward indefinitely.

B. Wealth tax

In principle, resident individuals in Suriname are subject to a wealth tax on the net value of their assets. Nonresident individu als are subject to wealth tax only on the following: • Immovable property owned in Suriname or the rights to such property

• Debt obligations owned if the principal amount of the obliga tion is secured by mortgaged immovable property located in Suriname

• Entitlement, other than as a shareholder, to the assets of a Suriname permanent establishment, provided that the individu al is subject to Suriname income tax

Specific exemptions apply for certain assets. In addition, special rules may apply to married resident individuals.

The wealth tax rate is 3% on the net value in excess of SRD100,000, or SRD120,000 for married resident individuals.

Residence is determined based on the applicable facts and cir cumstances, such as an individual’s domicile (the availability of a permanent home), physical presence and the location of an individual’s vital personal and economic interests.

C. Social security, basic illness insurance law and pension law

Social security. In principle, resident individuals must pay social security contributions, which are contributions for the old-age insurance. Some residents are exempt from paying social security contributions.

The annual old-age insurance contribution is 4% of employment income.

Basic illness insurance law and pension law. The basic illness insurance law and the pension law apply to resident individuals. The basic illness insurance law, which took effect on 9 October 2014, aims to sufficiently insure every Suriname resident against costs of illness. The pension law, which took effect on 9 December 2014, aims to provide every Suriname resident with a pension.

The principal obligations of employers under these laws consist of providing sufficient insurance coverage against the costs of illness, arranging for participation in a pension scheme and pay ing at least 50% of the insurance premiums and the pension premiums.

D. Tax filing and payment procedures

The standard tax year is the calendar year. However, on request and under certain conditions, a business may use a different financial accounting year as its tax year.

Because the wage tax is a pre-levy to the income tax, employers must file wage withholding tax returns on a monthly basis. In principle, Suriname wage tax returns must be submitted for monthly periods. Because the Suriname wage tax is a pre-levy on the Suriname income tax, residents and nonresidents remain lia ble for Suriname income tax if the wage tax is not withheld cor rectly. The wage tax returns must be filed and the wage tax due must be paid by the seventh business day of the month following the end of the reporting period. For most nonresident employees, wage withholding tax is a final tax.

If the fiscal year is the calendar year, resident taxpayers must file a preliminary tax return by 15 April of the current fiscal year. Otherwise, they must file this return within two and one-half months after the beginning of the current fiscal year. The return must show taxable income that is at least equal to the taxable

income shown on the most recently filed final tax return. In principle, the tax due on this preliminary income tax return must be paid in four equal installments, which are due on 15 April, 15 July, 15 October and 31 December. An extension of time to file the return and pay the tax is not granted. On request of the taxpayer, the Tax Inspector may consent to the reporting of a lower taxable income than the taxable income shown on the most recently filed final tax return.

Nonresident taxpayers must only file a final income tax return. The final income tax return must be filed within four months after the end of the fiscal year or after the individual is no longer subject to tax. Any difference between the tax due based on the preliminary return and the tax due based on the final return must be settled at the time of the filing of the final return.

Social security payments. Social security contributions (old-age insurance contributions) are withheld by the employer and are declared in the wage tax returns. Otherwise, they are due when the final individual income tax return is filed.

Basic illness insurance law and pension law. Employers must with hold the employees’ shares of the premiums required under the basic illness insurance and pension laws from wages and remit these withholdings.

Wealth tax returns. For married individuals, in principle, one wealth tax return is required to be filed. Under certain circum stances, two returns may be filed. The Suriname Tax Inspector provides the form for a wealth tax return. The form must be filed within 20 days after receipt of the form. If, based on the applicable law, a taxpayer is required to file a wealth tax return, but does not receive a form, the taxpayer must file a wealth tax return by 15 February or within two months after establishment in Suriname.

E. Double tax relief and tax treaties

Suriname has entered into tax treaties with Indonesia and the Netherlands. These treaties contain provisions to avoid double taxation between Suriname and the other countries regarding taxes on income.

If no treaty applies, the Suriname Tax Inspector may be contacted for possible application of an exemption to avoid double taxation.

F. Residency and working permits

In general, foreign individuals who wish to reside and work in Suriname need residency and working permits. The conditions for obtaining such permits depend on the nationality of the indi vidual.

G. COVID-19 measures

COVID-19 measures are discussed below.

Filing and payment dates for the 2021 and 2022 preliminary tax returns. For both corporations and individuals, the due date for filing the preliminary tax return for 2021 is extended from 15 April 2021 to 15 June 2021. Following an additional announcement from the tax authorities, a grace period applies until 15 August 2021. Accordingly, no fines or interest are imposed until 15 August 2021. For the filing of the preliminary tax return for 2022, the ultimate filing should remain as statutory determined (that is, 15 April 2022).

Payments. As mentioned in Section D, any amount due and pay able on filing of the preliminary tax return for 2021 can be paid in four equal installments on 15 April, 15 July, 15 October and 31 December 2021. The timing of the quarterly payments remains in force except for the revised payment dates of the first and second installments, which is extended from 15 April and 15 July 2021 to 15 August 2021. Accordingly, no fines or interest are imposed until 15 August 2021. For the preliminary tax return for 2022, the ultimate payment date should remain as statutory determined with an ultimate payment date for the first installment of 15 April 2022.

Filing and payment dates for the 2020 and 2021 final tax returns. For corporations, the ultimate filing date of the 2020 final corporate income tax return is extended from 30 June 2021 to 30 August 2021 following an additional announcement from the tax authorities. Any corporate income tax due on this return should be paid by 31 August 2021. For individuals, the ultimate filing date of the 2020 final personal income tax return is extended from 30 April to 30 June 2021. Following an additional announcement from the tax authorities, a grace period applies until 31 August 2021. Accordingly, no fines or interest are imposed until 31 August 2021

In addition, taxpayers who are experiencing cash flow challenges because of the COVID-19 pandemic can submit a substantiated request to the Tax Collector of Direct Taxes to qualify for a deferred payment arrangement. This measure seems to apply to all taxes falling under the authority of the Tax Collector of Direct Taxes (that is, corporate income tax, personal income tax, wage tax, dividend withholding tax, old age premiums and turnover tax). The extent of the cash flow problems required in order to benefit from a deferred payment arrangement is not specified or defined.

Wage tax. As mentioned in Section D, wage tax returns should be filed, and any wage tax due should be paid by the seventh business day of the month following the end of the reporting period. Furthermore, the personal tax credit was increased from SRD125 to SRD750 per month for a maximum of six months starting from May 2020. However, it is now extended until the introduction of a new value-added tax system (expected 1 July 2022). As such, the personal tax credit of SRD9,000 on an annual basis (that is, SRD750 per month) is applied for the period of 1 February 2020 until the introduction of the value-added tax system, which is expected to occur on 1 July 2022.

Devaluation compensation allowance. The government of Suriname increased the devaluation compensation allowance

from SRD100 to SRD800 as of 1 September 2021. This is a taxfree allowance. The net allowance to a maximum of SRD 800 can be applied if the salary is increased in September 2021 or going forward. If a salary increase was made in 2021 before 1 September 2021, this allowance can equally be applied with explicit approval from the Suriname tax authorities. If the salary increase exceeds SRD700 (difference between SRD100 and SRD800) the excess is considered taxable wage.