Effects of tax treaty are “uncertain but minimal”

POSTED: 10/6/15 9:08 PM


St. Maarten – The financial consequences of a treaty to prevent double taxation between the Netherlands and St. Maarten is uncertain, finance Minister Martin Hassink said in a Central Committee meeting yesterday morning, adding that he thinks the effects will be minimal.

Independent MP Cornelius de Weever asked about the financial consequences of the treaty. “How can a law go into effect without knowing the financial consequences”? “I agree with that,” Minister Hassink said. “You can make estimates but it is uncertain. The effect also depends on the behavior of taxable subject. They may change the way they are doing things. There are no historical facts, so you just don’t know what is going to happen.”

The treaty comes in the place of the BRK – the kingdom tax regulation, but the BRK will remain in place between St. Maarten. Curacao and Aruba until there are new bilateral treaties. Among the changes the treaty presents are a higher tax by the Dutch on dividends (from 8.3 to 15 percent), while pension income will be taxed in the resident state.

Minister Hassink said that the expat regulation has been abolished for the public sector but that it is still in place for the private sector.

He said that the treaty had not been discussed with stakeholders. “There is no way we would do this, that would have the wrong effect an enable stakeholders to anticipate measures.

The treaty also exempts Dutch entrepreneurs who do business for no more than 183 days in a 12-month period from profit taxes. “This does not mean that they don’t pay taxes at all,” Minister Hassink said in answer to a question from MP Tamara Leonard. “They pay turnover tax and income tax. If they work more than 183 days they are also subject to profit tax.”

Minister Hassink described the treaty as “a conglomerate of rules to avoid double taxation and the avoidance of taxes. This brings it in line with international standards. Negotiations about tax treaties are done in the highest secrecy, not with the involvement of stakeholders.”

A report about the deliberations in the Central Committee will be sent to the Second Chamber in the Netherlands.

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