With the closure of its borders, the economic activity in Sint Maarten has drastically declined and is further projected to have continued adverse effects on the major economic pillar, tourism. The CBCS forecasts economic contraction of approximately 30 per cent of the country’s GDP if borders remain closed for six (6) months. The Government assumes an even more conservative outlook. As a result, the impact is not limited to rapid increase of unemployment, but includes (i) businesses and individuals failing to meet financial obligations, (ii) increased Government budget deficits due to sharp drop in tax revenues and increasing expenditures putting pressure on balance of payments and (iii) foreign reserves coming under pressure.
Based on the above elucidation, Sint Maarten is in dire need of financial assistance to implement measures to assist affected groups, mitigate any potential spillover effects and restore growth and confidence.
The Government of Sint Maarten has put together a Relief and Economic Stimulus Program that captures direct relief for the following:
- Payroll support for businesses that are impacted;
- Income support for Sole proprietors, vendor license holders, bus and independent taxi drivers;
- Income support for the unemployed;
- Liquidity support for Government;
In this article we will provide a recap of the payroll support plan.
Payroll Support Plan
To support businesses that are facing revenue losses and to assist in the prevention of layoffs, Government will provide eligible employers* with payroll support. This initiative will ensure job retention and create a buffer for furthering economic impact. Government will pay up to 80% of the payroll of qualifying businesses with a minimum of ANG 1,150 for a full- time employee for a maximum period of three (3) months (this period can be adjusted by the Government of Sint Maarten).
The main condition is that qualifying companies/employers should keep their employees on their payroll to prevent mass layoffs. These companies will need to demonstrate that their revenue has decreased by more than 20%, because of the COVID-19 pandemic. Revenue of March 2019 will be compared to that of 2020 for the same period. Monthly Tax & Premium Declarations will be used to determine if the relevant threshold is met. For newly established companies, revenues of January, February and March 2020 will be compared as well as other information such as benchmarks in the relevant sectors.
*) A list with business sector/category that are exempted for the Payroll support package can be found on the website www.ssrp.sx/exempt-list-business-sector-category/
Employers must verify the employees’ information in SZV’s registry via the online SZV Employer Portal. The correctness of this information is important as the calculation of the Payroll Support contribution is based hereon. The employer can submit mutations for the differences that are detected no later than April 24, 2020 for the support for the month of April.
For each month of the Payroll Support Program, employers have to fill in an application form named the Covid-19 Stimulus Employer/Business Application form which can be found on the SZV Employer Portal. The deadline for submitting the application is:
- For April: April 24, 2020
- For May: May 22, 2020
- For June: June 19, 2020
An employer has to prove, based on the declared revenue (the total of the taxed- and exempted revenue) as per the comparison of the monthly TOT returns for the applicable months of 2019 and 2020, that their revenue has declined by more than 20% because of the Covid-19 pandemic. For the Payroll Support contribution for the month April, the declared revenue on the TOT declaration of March 2019 will be compared to that of March 2020 to prove the decline of its revenue. This will be done subsequently for the next two months. Employers have to upload the applicable TOT returns when filing their monthly application.
If the employer was not (fully) operational in 2019, the declared revenue of the February 2020 TOT declaration need to be compared to the declared revenue of TOT declarations for the months of March, April and May 2020.
In order to provide proof of the revenue decline, employers must submit and pay on time to the applicable authorities their monthly (i) ZV/OV declarations, (ii) Wage Tax & AVBZ tax returns and (iii) TOT tax return:
- The declarations for the month of March must be done no later than the application date (no later than April 24, 2020) of the Covid-19 Stimulus Employer/Business Application Form. Payment is due no later than May 4, 2020. The TOT declarations of March will be used by SZV to evaluate the Payroll Support Plan for the month of April 2020.
- The declarations for the month of April: declaration and payment no later than May 15, 2020. The declarations and payment for April will be used by SZV to evaluate the Payroll Support Plan for the month of May 2020.
- The declarations for the month of May: declaration and payment no later than June 15, 2020 for the month of June Covid-19 stimulus payroll support. The declarations and payment of May will be used by SZV to evaluate the Payroll Support Plan for the month of June 2020.
The employer has to pay the monthly taxes and social premiums and have to continue paying its registered employees.
The submitted application will be processed internally by SZV. If there is any information missing in the application, SZV will contact the employer via the email address as provided by the employer in the application.
Employers must provide a Dutch Sint Maarten bank account in the application form. All payments with regards of the Payroll Support Plan, will be done by SZV in guilders (NAf) to this bank account.
Lockdown Payroll Support Plan
In addition to the Payroll Support Plan, the Government of Sint Maarten introduced an additional payroll support plan, the Lockdown Payroll Support Plan. This program is for (i) those employers that are not qualifying for the Payroll Support Plan and (ii) have a decline of their revenue of more than 20% in April 2020 (compared with April 2019) as the result of the lockdown that was enforced by Government as of April 5, 2020. Employers that are listed on the exempt list Lockdown Payroll Support Plan will not qualify for the Lockdown Payroll Support Plan.
In order to qualify for the Lockdown Payroll Support Plan the same conditions and requirements, including the applicable contribution percentage, apply as for the Payroll Support Plan with the following exemptions:
- Qualifying employers will have to submit their application form for the Lockdown Payroll Support Plan via the SZV Employer Portal not later than May 22, 2020;
- An Employer has to prove, based on the declared revenue (the total of the taxed and exempted revenues) as per the TOT returns of April 2020 and April 2019, that their revenue has declined by more than 20% because of the lock down.
Payment of the applicable contribution for Lockdown Payroll Support Plan will be done by SZV between May 25 and May 30, 2020.
- Compliance with payroll (ZV/OV, Wage Tax, AVBZ) and TOT declarations
All payroll (ZV/OV, Wage Tax, AVBZ) and TOT declarations should be filed for the month of March, April, and May. Consequently, if the ZV/OV, Wage Tax, AVBZ and TOT tax return for the month of March have not been filed and paid yet and you want to apply for the Payroll Support Plan, then you will need to file these returns for the month of March no later than April 24, 2020. Payment is due no later than May 4, 2020.
- Register for support at SZV Employer Portal
The Social and Health Insurances (SZV) has been entrusted by the Government of Sint Maarten to execute the Covid-19 Stimulus Payroll Support Plan on behalf of Government. Employers that want to apply for this Payroll Support Plan must have an active account for the SZV Employer Portal. If you do not have an account, visit the Employer Portal page and register for an account.
- Complete the application form
The procedures and Terms & Conditions for the application of the payroll support package can be found on the website www.ssrp.sx The application form will be available as of Tuesday, April 21, 2020 through the active SZV Portal Accounts. To start the application process, log into the SZV Employer’s portal and follow further instructions.
Please note that this article is a summary of what can be found on www.ssrp.sx
If you have any questions or need assistance with the tax measures or your financial position, please do not hesitate to contact us at [email protected]
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO St. Maarten B.V. to discuss these matters in the context of your particular circumstances. BDO St. Maarten B.V., its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.