Indirect tax - Dutch Caribbean (Sint Maarten)

Turnover Tax (TOT) is the main type of indirect taxation in St. Maarten

It is a tax on consumption which is levied from businesses based on revenues realized with the sale of goods and provision of services. It is not levied on imports.

A business subject to the tax will include TOT (output tax) in its sales price and incur TOT (input tax) on its purchases. As the TOT is levied from businesses throughout the supply chain, the input tax cannot be offset against the output tax. The tax payable is equal to the output tax.

A transaction is within the scope of St. Maarten TOT if the following conditions are met:

• it is a supply of goods or services
• it takes place in St. Maarten
• it is made by an 'entrepreneur'. The term entrepreneur includes any organisation of labor and capital that partakes in the course of trade. In addition, it includes any person who exploits an asset for the purpose of (structurally) obtaining proceeds therefrom.
• it is made in the course or furtherance of any business carried on by that person or entity.

There is a standard rate of 5%. Some goods and services are exempted from the tax.

The TOT is not levied on imports.

Any person that qualifies as an entrepreneur must register for TOT purposes and file monthly tax returns, even if the taxable turnover is nil. In principle, non-resident businesses who realize turnover within St. Maarten are subject to the tax.

They are deemed to be domiciled at the Inspectorate of Taxes. Services are deemed to have been provided within St. Maarten if they are 'consumed' in St. Maarten. This means that, for instance, non-resident service providers of management services, consulting services or insurance coverage for St. Maarten based risks, provide these services in St. Maarten.

Certain types of delivery of goods, in which the ownership of these goods transfers from the vendor to the buyer when these goods are already in St. Maarten (for example, the delivery and installation of an elevator), are deemed to take place at the location where the goods are when this transfer occurs.

Upon request, signed by both the supplier and the customer, a transfer of the liability to pay TOT is possible, on the condition that the customer is an entrepreneur. This transfer of TOT obligations, in the event the customer is an entrepreneur, also occurs in the event the non-resident supplier did not meet its obligations under the TOT regulations.

TOT returns cover an accounting period of one month, ending on the last day of a calendar month. The tax return must be filed, and payment of the tax must be made, on or before the 15th of the following month. It is not possible to request extensions.

A default surcharge penalty of 15% will be imposed by the tax authority if TOT returns are not submitted on time, or the related tax is not paid by the due date.

Resident businesses must provide a reconciliation of the turnover accounted for in the TOT returns with the gross revenues accounted for in the financial statements enclosed with the Corporate Income Tax return. As the tax is determined on a cash basis (on request the tax may be determined based on the invoice system), the increase/decrease of accounts receivable creates a difference between the TOT return and financial statement listed total revenues.

Yes. A range of penalties can be imposed where businesses do not comply with the TOT rules.

Civil penalties and interest can be applied for errors and omissions made on tax returns, or where the tax is paid late. Penalties can also be applied where the business has failed to maintain adequate records, provide information (including additional declarations), or makes repeated mistakes. In the event the quality of the administrative records is deemed to be insufficient, the Inspector of Taxes may reverse the burden of proof and estimate (within reason) the amount of tax to be paid.

Criminal proceedings may be brought in the case of more serious matters.

Sint Maarten based persons and entrepreneurs are obliged to issue a consecutively numbered and dated invoice to the customer regarding their deliveries and services, which is stated in a clear and well-arranged manner. No detailed instructions for an invoice are available, as such this is a form-free design. Therefore, invoices (or ‘proof of payment’ or any other naming can be used) come in various types. However, at least the following items should be stated on an invoice:

• the day on which the delivery or the service is performed.
• name and address of the entrepreneur who provides the delivery or service.
• the registration number assigned by the tax authorities (Sint Maarten) of the person who provides the delivery or service.
• a clear description of the delivered goods or of the service provided.
• the quantity of the delivered goods.
• the compensation.
• the amount of tax that has become due in respect of the delivery or the service. This is not required for Turnover Tax, and even discouraged in the past by the Minister.

There are no rules provided for invoices issued by non-resident persons and enterprises.