Library of Congress

Law Library of Congress

The Library of Congress > Law Library > News & Events > Global Legal Monitor

Suriname: VAT Tax to Be Initiated in 2016

(Nov. 14, 2014) On October 31, 2014, the International Monetary Fund commended Surname’s recent efforts to address the country’s “widening fiscal and external imbalances, and the progress made on financial sector reform,” in the wake of its weakened macroeconomic conditions in 2013, and called upon its authorities to continue to adopt prudent policies and reforms to ensure stability, provide for diversification, and broaden growth. The IMF noted that “the main challenges the authorities are addressing continue to be to strengthening institutions and adjusting policies to reverse the recent deterioration and strengthen external stability.” (Press Release, No. 14/492, International Monetary Fund, IMF Executive Board Concludes 2014 Article IV Consultation with Suriname (Oct. 31, 2014).)

To that end, the IMF proffered the advice that “[t] imely implementation of the VAT [value-added tax], together with further reform and modernization of the customs and tax structure, will strengthen revenues.” (Id.) The IMF had already urged Suriname to adopt the VAT in 2013, and the tax was to have been implemented as of January 1, 2014. (Mike Godfrey, IMF Pushes for VAT Introduction in Suriname, TAX-NEWS (Oct. 25, 2013).)

The change was not implemented this year, however, and, and Suriname still charges a turnover tax for a wide range of goods and services supplied within the country as well as on the importation of most goods. (Suriname, § 8. Value Added Tax, IBFD Tax Research Platform, International Bureau of Fiscal Documentation [IBFD] online subscription database (last visited Nov. 10, 2014).) A turnover tax is “[a] tax paid on a good during or after its manufacture, rather than when it is sold. It is usually calculated as a percentage of the value of a good. (Turnover Tax, THE FREE DICTIONARY (last visited Nov. 10, 2014).)

The general rate of Suriname’s turnover tax “is 10% for the supply and import of goods and 8% for the supply of services. Basic foodstuffs are zero rated.” (Suriname, supra.) In contrast to turnover tax, VAT is a form of consumption tax applied to a good “whenever value is added at a stage of production and at final sale,” and the amount of VAT paid by the user “is the cost of the product, less any of the costs of materials used in the product that have already been taxed.” (Value-Added Tax – VAT, INVESTOPEDIA (last visited Nov. 10, 2014).)

Now Suriname plans to introduce the VAT system starting January 1, 2016. It is expected that the VAT will replace the turnover tax. Suriname also reportedly may reduce the income tax levied on low-income earners. (Janne-Eve d’Auvergne Suriname; International Monetary Fund: VAT to Be Introduced, TAX NEWS SERVICE (Nov. 6, 2014), IBFD online subscription database.)