Doing Business in Sint Maarten www.bakertillyinternational.com
This guide has been prepared by Baker Tilly St Maarten B.V., an independent member of Baker Tilly International. It is designed to provide information on a number of subjects important to those considering investing or doing business in St. Maarten Baker Tilly International is the world s 8 th largest network of independent accounting and business advisory firms by combined fee income, and is represented by 154 firms in 133 countries and 27,000 people worldwide. Its members provide high quality accounting, assurance, tax and specialist business advice to privately held businesses and public interest entities. This guide is one of a series of country profiles compiled for use by Baker Tilly International member firms clients and professional staff. Copies may be downloaded from www.bakertillyinternational.com. Doing Business in St. Maarten has been designed for the information of readers. Whilst every effort has been made to ensure accuracy, information contained in this guide may not be comprehensive and recipients should not act upon it without seeking professional advice. Facts and figures as presented are correct at the time of writing. Up-to-date advice and general assistance on St. Maarten matters can be obtained from Baker Tilly St. Maarten B.V., contact details can be found at the end of this guide. November 2015
Contents 1 Fact Sheet 2 2 Business Entities and Accounting 4 2.1 Companies 4 2.2 Partnerships 5 2.3 Foundations 6 2.4 Sole Proprietorships 6 2.5 Audit and Accounting Requirements 7 2.6 Filing Requirements 7 3 Finance and Investment 8 3.1 Exchange Control 8 3.2 Banking and Sources of Finance 8 3.3 Investment Incentives and Restrictions 9 4 Employment Regulations 10 4.1 General Employment Matters 10 4.2 Visas 11 4.3 Trade Unions 11 5 Taxation 12 5.1 Corporate Income Taxes 12 5.2 Personal Taxes 13 5.3 Employment Related Costs and Taxes 13 5.4 Withholding Taxes on Payments Abroad 14 5.5 Business Turnover Tax 14 5.6 Other Taxes 14 5.7 Tax Incentives for Businesses 15
2 1 Fact Sheet Facts and figures as presented in sections 1 through 4 are correct as at 16 November 2015. Geography Location: Area: Land boundaries: Coastline: Climate: Terrain: Caribbean 34km² Saint Martin (French part of the island) Caribbean Sea Time zone: GMT -4 Tropical marine climate; northeast trade winds result in moderate temperatures; hurricane season runs from July to November Low, hilly terrain; volcanic origin People Population: 38,247 (January 2015 estimate) Religion: Roman Catholic 39%, Protestant 44.8%, none 6.7%, other 5.4%, Jewish 3.4%, not reported 0.7% (2001 census) Language: Dutch and English are the official languages Government Country name: Government type: Capital: Administrative divisions: Sint Maarten Parliamentary Philipsburg None (St. Maarten is part of the Kingdom of the Netherlands)
Doing Business in St. Maarten 3 Political situation The unicameral Parliament (Staten) has 15 seats. The Head of State is the King of the Netherlands who is represented by the Governor General. The Head of Government is the Prime Minister, who is usually the leader of the party with majority vote and is elected by Parliament. Economy GDP per capita: US$25,000 (2012) GDP real growth rate: 1.7% (2014 estimate) Labour force: 21,071 (2013) Unemployment: 9.2% (2013) Currency (code): Netherlands Antillean guilder (also known as florin) (ANG)
4 2 Business Entities and Accounting The main company forms in St. Maarten are the private limited liability company and the public limited liability company. Other business forms include partnerships and sole proprietorships. Foundations and private foundations are also available. Most businesses in St. Maarten require a business licence. Company directors require a licence from the relevant authority. 2.1 Companies 2.1.1 Private limited liability companies A private limited liability company may be founded by one or more persons by notarial deed. The company is a separate legal entity and has one or more registered shares. The shareholders are not generally personally liable for the debts of the company. However, the articles of association may provide that shareholders, or a particular class of shareholders, are personally liable (whether or not jointly or severally) for some or all of the company s debts. Private limited liability companies are administered by general meetings of the shareholders and are managed by a management board. A supervisory board consisting of at least one member may also be appointed. The articles of association may alternatively provide that the management of the company is undertaken by a general board and an executive board. In such cases, the allocation of duties is established by legislation. The articles of association may provide that the company is a shareholder controlled company. In such cases, the shareholders undertake the management of the company. A private limited liability company may appoint an external expert to monitor the company s accounts. 2.1.2 Public limited liability companies A public limited liability company may be incorporated by one or more persons by notarial deed. The company is a separate legal entity and has one or more registered or bearer shares. The shareholders are not generally personally liable for the debts of the company. However, the articles of association may provide that shareholders, or a particular class of shareholders, are personally liable (whether or not jointly or severally) for some or all of the company s debts.
Doing Business in St. Maarten 5 Public limited liability companies are administered by general meetings of the shareholders and are managed by a management board. The articles of association may provide that the management of the company is undertaken by a general board and an executive board. In such cases, the allocation of duties is established by legislation. A supervisory board consisting of at least three members (natural persons) may also be appointed. A public limited liability company may appoint an external expert to monitor the company s accounts. Large public limited liability companies (as defined) are required to appoint an external expert. 2.1.3 Company names and registration The company name must include its organisational form or relevant abbreviation. Companies must be registered with the Trade Register which is administered by the St. Maarten Chamber of Commerce and Industry (COCI). 2.2 Partnerships 2.2.1 General partnerships A general partnership may be formed by two or more partners. The partners are jointly and severally liable to an unlimited extent for the debts and obligations of the partnership. General partnerships must be registered with the Trade Register which is administered by the Chamber of Commerce and Industry (COCI). 2.2.2 Limited partnerships A limited partnership may be formed by two or more partners. There must be at least one general partner and at least one limited partner. The general partners are jointly and severally liable to an unlimited extent for the debts and obligations of the partnership. The liability of limited partners is generally limited to their capital contribution. Limited partners may not take part in the management of the partnership; if they do so, they become jointly and severally liable for the debts and obligations of the partnership. Limited partnerships must be registered with the Trade Register which is administered by the St. Maarten Chamber of Commerce and Industry (COCI).
6 2.3 Foundations 2.3.1 Foundations A foundation may be established by notarial deed. A foundation has no members or shareholders and is established in order to achieve a specified objective. A foundation may not make distributions to the founders or to bodies of the foundation. Distributions may be made to others for a philanthropic or social purpose. 2.3.2 Private foundations A private foundation may be established by notarial deed. A private foundation has no members or shareholders and is established in order to achieve a specified objective. A private foundation may make distributions to its founders. The objective of a private foundation may not include conducting a business. 2.4 Sole Proprietorships An individual may generally undertake business activities in St. Maarten as a sole proprietorship. The individual owner is liable for the debts and obligations of the business with all of their assets. Sole proprietorships are required to be registered with the Trade Register which is administered by the Chamber of Commerce and Industry (COCI).
Doing Business in St. Maarten 7 2.5 Audit and Accounting Requirements Companies are required to prepare annual accounts within eight months after the end of the financial year (this period may be extended by up to six months by the general meeting in special circumstances). The annual accounts must include a balance sheet, income statement, and document explanations. Large public limited liability companies (as defined) are required to prepare annual accounts and an annual report within six months after the end of the financial year (this period may be extended by up to six months by the general meeting in special circumstances). The annual report is required to provide a true and fair view of the situation of the company on the balance sheet date and the state of affairs of the company and of any subsidiaries included in the accounts. Large public companies are required to have their annual accounts audited by the appointed external expert. Annual accounts must be prepared in accordance with generally accepted accounting principles. Large public limited liability companies are required to prepare their accounts in accordance with the standards established by the International Accounting Standards Board (IASB) or in accordance with other internationally recognised standards if appropriate. Accounting books and records must be kept for a period of at least 10 years. 2.6 Filing Requirements The tax declaration submitted to the tax authority (see 5.1) must be accompanied by a copy of the balance sheet, income statement, and annual report.
8 3 Finance and Investment 3.1 Exchange Control A licence fee of 1% is generally levied on foreign currency cash transactions and on transfers made by residents to non-residents. Exemptions may be available in certain circumstances. Legislation requires those that undertake a trade or profession in certain services (generally financial services) to report unusual transactions to the Financial Intelligence Unit (FIU). 3.2 Banking and Sources of Finance The Central Bank of Curaçao and St. Maarten (Centrale Bank van Curaçao en Sint Maarten) is responsible for (amongst others) monetary policy, financial stability, managing foreign exchange reserves, issuing national currency, and supervising bank and credit institutions. Commercial banks operating in St. Maarten provide the majority of financial services. A non-resident company may open a local ANG bank account subject to licence requirements and certain other restrictions. A non-resident company may open a foreign account in ANG in St. Maarten without obtaining a licence if the balance does not exceed ANG200,000 and if the account is funded with foreign exchange. A non-resident company may not hold a local account in a foreign currency. The Dutch Caribbean Securities Exchange (DCSX) provides a marketplace for listing and exchanging securities.
Doing Business in St. Maarten 9 3.3 Investment Incentives and Restrictions For business related incentives, see 5.7. There are generally no restrictions on foreign business investment in St. Maarten. However, investments in certain sectors, such as banking and other financial services, may require authorisation.
10 4 Employment Regulations For employment tax considerations, see 5.3. 4.1 General Employment Matters 4.1.1 National employment standards Legislation provides minimum rights and conditions of employment in St. Maarten, including maximum weekly working hours, rest periods, paid annual leave entitlement, and maternity leave rights. A contract of employment may be concluded orally or in writing. A written contract of employment should include: Names and residences of the parties Place of work Job role, job description, and salary Date that employment commences Duration of the contract (whether it is for a definite or indefinite period of time) Holiday entitlement Normal working hours Benefits (if applicable), and Probationary period (if applicable). The employer and employee may agree to a probationary period of employment. The agreement must be in writing and the probationary period may not exceed two months in duration. Either party may terminate the contract of employment without notice during the probationary period. The notice period required by an employer to terminate a contract of employment varies depending on the employee s length of employment. For employees, the notice period required is one month. Either party may terminate the contract of employment without notice. In such cases, the terminating party is liable to pay damages unless the termination is for an urgent reason. For an employer, an urgent reason may relate to the characteristics or behaviour of the employee which means that the employer cannot reasonably allow the employment to continue. For an employee, an urgent reason arises in circumstances where the employee cannot reasonably be expected to continue the employment. The minimum hourly wage in St. Maarten is ANG8.75.
Doing Business in St. Maarten 11 4.1.2 Pensions and other benefits Social security contributions (see 5.3.2) generally provide associated benefits. 4.2 Visas Citizens of certain countries (including European Union member states and the United States) do not generally require a visa to visit St. Maarten. Citizens of other countries require a Caribbean visa which permits entry into Aruba, Curaçao, St. Maarten, and the Caribbean Netherlands (Bonaire, St. Eustatius and Saba), unless the visa is territorially limited. Foreign individuals wishing to live in St. Maarten require a residence permit. Foreign individuals wishing to work in St. Maarten require a work permit. There are generally no restrictions on foreigners purchasing real property in St. Maarten. 4.3 Trade Unions One or more employees associations may negotiate and conclude collective agreements with one or more employers or one or more employers associations.
12 5 Taxation Facts and figures as presented in section 5 are correct as at 16 November 2015. 5.1 Corporate Income Taxes Resident entities, which are entities established under St. Maarten legislation and entities which are managed and controlled in St. Maarten, are generally subject to tax on their worldwide income. Non-resident entities are generally subject to tax on specified St. Maarten source income, subject to the terms of any relevant tax agreement/treaty. The standard corporate income tax rate is 30%. A 15% surtax also applies, resulting in an effective corporate income tax rate of 34.5%. Eligible shipping companies may alternatively choose to be subject to tonnage tax. Taxable income must generally include any taxable capital gains. Dividends and capital gains received in respect of a qualifying participation may be tax exempt in full or in respect of a specified percentage. Unutilised losses can generally be carried forward for up to 10 tax years. Group tax consolidation (fiscal unity) is available in St. Maarten if ownership requirements (99%) and other conditions are met; consequently losses can be offset against the profits of another company in the same group. The tax year is the calendar year. The use of an alternative financial year is permitted in limited circumstances. Taxpayers are required to file a provisional tax return and make the associated payment by the last day of the third month following the end of the financial year. A final tax return, and any additional tax payable, is due by the last day of the sixth month after the end of the financial year (extension possible).
Doing Business in St. Maarten 13 5.2 Personal Taxes Resident individuals are generally subject to income tax on their worldwide income. Non-resident individuals are generally subject to income tax on their St. Maarten source income, subject to the terms of any relevant tax agreement/treaty. Individuals are generally subject to tax on their taxable income (subject to deductions, allowances and exemptions) at the following rates (including 25% surtax): Taxable Income Tax Rate Up to ANG31,117 12.5% Over ANG31,117 ANG46,676 20% Over ANG46,676 ANG64,828 26.25% Over ANG64,828 ANG97,239 33.75% Over ANG97,239 ANG137,431 40% Over ANG137,431 47.5% A special tax regime is available to qualifying pensioners living in St. Maarten under which foreign source income is subject to tax (including surtax) at the rate of 10%, or net income from foreign sources is deemed to be ANG500,000 and is subject to tax at the standard rates (if this would result in a lower tax liability). Income from a substantial shareholding (5%) is taxed at a rate of 18.5% (including surtax). Inheritance and gift taxes are generally imposed at rates ranging from 2% to 24%, depending on factors such as the recipient and the value of the inheritance or gift (the rate is 25% for acquisitions by a private fund), subject to exemptions. 5.3 Employment Related Costs and Taxes 5.3.1 Fringe benefits There is no separate fringe benefits tax. Unless specifically exempt, the taxable value of benefits-in-kind form part of the taxable income of individuals and are subject to wage tax.
14 5.3.2 Social security costs Employers and employees are generally required to make social security contributions (subject to salary ceilings) in respect of: Pensions (old age, and widows/ers and orphans) Health insurance General medical insurance, and Accident insurance (employer only). 5.4 Withholding Taxes on Payments Abroad There are generally no withholding taxes on payments made abroad. However, a 35% withholding tax may apply to interest paid to residents in European Union (EU) member states where exchange of information has not been chosen. 5.5 Business Turnover Tax Business turnover tax is generally levied on the supply of goods and services in St. Maarten. The standard business turnover tax rate is 5%. Certain supplies are exempt, including residential property leases to private individuals, lottery tickets, transportation by aircraft and ships, certain fuel supplies, medical and dental services, medicines, basic foodstuffs, and exports. 5.6 Other Taxes 5.6.1 Stamp duty Stamp duty is levied at varying rates on certain documents, such as leases, licences, and court documentation. 5.6.2 Transfer tax Transfers of immovable property and ships are generally subject to transfer tax at the rate of 4%, subject to exemptions. 5.6.3 Licence fee A licence fee of 1% is generally levied on foreign currency cash transactions and on transfers made by residents to non-residents. Exemptions may be available in certain circumstances.
Doing Business in St. Maarten 15 5.7 Tax Incentives for Businesses 5.7.1 Exempt companies Private companies that meet qualifying conditions may apply to be an exempt company. The objective of the company and its activities must be exclusively, or almost exclusively, relating to certain activities, such as providing credit, investment in securities, and deposits. The company must not be a bank or other financial institution supervised by the Central Bank of Curaçao and St. Maarten (Centrale Bank van Curaçao en Sint Maarten). Exempt companies are not subject to corporate income tax. 5.7.2 Investment allowance An investment allowance of 8% (12% in respect of new buildings and building improvements) is available in respect of investments of at least ANG5,000 in qualifying assets during a tax year. The allowance may be deducted in the year of acquisition and in the following year. 5.7.3 Industrial enterprises and hotels Tax exemptions are available to qualifying industrial enterprises and hotels for a period of up to 11 years. Losses made during the first four years may be deducted from first the year in which a profit is made. 5.7.4 Land development Qualifying land development companies may benefit from various tax exemptions for up to 15 years. Qualifying conditions include minimum investment requirements and the promotion of economic activity and employment in St. Maarten.
Baker Tilly St Maarten B.V. www.bakertillydutchcaribbean.com Victor Bergisch RA bergisch@bakertillycuracao.com Ruud de Graaf AA degraaf@bakertillysxm.com Maarten Tervoort tervoort@bakertillysxm.com Arthur van Aalst vanaalst@bakertillycuracao.com
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