CONTRACT TAX Vs. WITHHOLDING TAX

Contract tax is levied on income earned from a contractor. A contractor is anyone who is a resident of Saint Lucia who provides or supplies independent personal services in exchange for compensation. A contractor is not considered an employee and is also not any of the following:

  • accountants, auditors or tax consultants
  • business or management consultants
  • lawyers
  • doctors, dentists, pharmacists or nurses
  • engineers
  • funeral undertaking services

Contract tax is levied on payments made to a contractor either directly or indirectly through a financial institution for the supply of labour or for the hiring of equipment. Contract tax is 10 percent (%) of the gross emoluments paid to the contractor, and can either be deducted and paid by the hiring entity on behalf of the contractor or the contractor can pay it directly to the Department.

By compariosn, the withholding tax is an income tax “withheld” from the earning of employees which is then paid directly to the Department. Like contract tax, withholding tax can be 10% of the gross amount; or 15% and 25%.

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