Suriname: Introduction of Value Added Tax (VAT) as per July 2022
May 13, 2022
Based on recent announcements we understand that the Surinamese government intends to introduce a Value Added Tax (‘VAT’) as per July 1, 2022. In this note we inform you of the possible consequences of this introduction.
First of all, it is important to state that with the introduction of the VAT, the current Sales Tax Act (i.e. Turnover Tax) will no longer be in effect. It is therefore no longer necessary to comply with the obligations of the Sales Tax Act. These obligations are, as it were, replaced by those of VAT. Under the new VAT, a tax will be levied on the consumption of goods and services at a general rate of 15%.
Please review our note on the general workings of VAT: https://hbnlawtax.com/tax-instant-news/implementation-of-a-vat-system-per-january-1-2023/
Expansion taxable territory
The taxable area for the VAT Act: Suriname, including the part of the seabed and its subsoil located outside the territorial sea under the Atlantic Ocean, insofar as Suriname on the basis of international law may exercise sovereign rights for the exploration and exploitation of the natural resources, as well as installations and other facilities present in, on or above that area for the purpose of exploration and exploitation of natural resources of that area.
This is different from the current Sales Tax, which is only applicable to the territorial waters.
Amendments compared to the Sales Tax
Compared to the soon-to-be-expired Sales Tax Act, a few things will change for the taxable Entrepreneur:
- A taxable Entrepreneur remains the same, i.e. an entrepreneur who supplies goods or provides services. In contrast to the Sales Tax, there is an extension of the taxed services. In principle, all services (performances) are taxed, unless exempt based on the Law;
- Services and Goods that were exempt for the Sales Tax, do not necessarily have to be exempt for VAT. If you would like to know which category will apply to your company, we can assess to what extent your tax position will change;
- The tax is no longer due from the moment of receiving the compensation, but from the moment of issuance of the invoice;
- The VAT is deductible for entrepreneurs, so it is possible to offset paid VAT against the VAT to be paid.
With regard to administrative obligations, the new VAT Act specifies more than the Sales Tax Act. To be specific, additional attention is required regarding the new deduction possibility. It is now even more important to properly register the services and goods supplied to you and the associated deduction of withholding tax. This is required for the deduction of the paid VAT and therefore requires extra attention after the introduction of the VAT. The other regular obligations (issuing invoices, monitoring purchases and sales and imports and exports), will remain the same. In short, adequate tax compliance is – certainly with the introduction of VAT – of great importance.
Introduction of VAT in Aruba
It is also expected that a similar VAT will be introduced in Aruba as of January 2023. The BBO/ BAVP / BAZV will be replaced by a VAT. The expected rate is also 15%.
Webinar – Implementation VAT in Suriname & Aruba
We expect in the month of June, in collaboration with our team from Aruba, to inform you about the relevant aspects and challenges associated with the implementation of a VAT law in both Suriname and Aruba via a webinar. We will keep you updated of the developments and setting up a Webinar event.
Once the implementation of the VAT system has been clarified by the government, we will inform you more about the changes to be made in your administrative system and how to best approach this.
HBN Law & Tax strongly believes that it is necessary to start preparing on time for such a significant change and would be happy to assist you with all your queries.