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Tax incentives

for investors equivalent

to a “tax holiday” scheme

Companies subject to corporate tax that are resident in the

Collectivité

of Saint-Martin, may deduct from their

taxable income the amount of productive investments they carry out in Saint-Martin in priority economic sectors

as well as any investments in the capital of certain companies.

The deduction is made on taxable income and in this way, as appropriate, reduces the amount of taxable income

for the year, or creates or increases the company’s losses. Since the tax treatment of losses follows the rules

of ordinary law on corporate tax of the

Collectivité

of Saint-Martin, the losses created or increased by the tax

deduction can be carried forward to subsequent years

indefinitely and for unlimited amounts.

The result is that the tax deduction mechanism for investment is comparable to other tax investment incentives

that apply particularly in the Caribbean region (“tax holiday”) where the company having made the investment

only actually becomes taxable on its profits once the aggregate amount thereof exceeds the amount of the

investment made.

This system applies to investment and equity investments carried out up to

31 December 2020.

1.

Tax Deduction for direct

investment

A.

DEDUCTIBLE INVESTMENTS

Types of investment

Only new productive investments qualify for tax incen-

tives, in other words, the acquisition or creation of new,

tangible and depreciable assets. These investments must

of course be used in Saint-Martin.

Notwithstanding this rule, any software required for the

use of these eligible investments forming an integral

element of those assets can benefit from the scheme.

The same applies for the sites of buildings and sites

for outbuildings that are essential and contingent to

those buildings.

Finally, works related to the renovation or rehabilitation

of classified hotels, holiday residences or holiday vil-

lages that form part of the assets, are also eligible for

tax incentives. This includes in particular all expenses

relating to the cost of those works (demolition costs,

construction costs and fitting out).

Eligible sectors of activity

To qualify for tax incentives, the above productive invest-

ments must be made in certain sectors, notably:

uu

the hospitality sector;

uu

the tourism sector:

a.

leisure activities: equipment for tourist sites, nautical

centers, beach or sports centers...;

b.

tourist accommodation: creation of tourist residences;

c.

tourist services: organizing trips or tours, car and

pleasure boat rental, restaurant services (under cer-

tain conditions);

uu

the transport sector, including auxiliary transport ser-

vices (port and airport handling activities, particularly

storage);

uu

the film and audiovisual production and distribution

sector;

20

BUSINESS TAXATION

DOING BUSINESS IN SAINT-MARTIN