Potentially three new taxes on St. Maarten by 2013

POSTED: 06/13/11 12:54 PM

St. Maarten – Residents of St. Maarten may be faced with at least three new taxes by the year 2013. The Finance Minister Hiro Shigemoto announced in Parliament Friday that the government is contemplating introducing a flat tax, introducing land tax and introducing an import duty on cars.

The potential measures are part of a broader package that is currently being studied by the Working Group New Tax System Country St. Maarten. The other ideas on table include shifting from direct to indirect taxes, broadening the tax base, lowering the income tax rates for businesses and workers and changing from taxing a worldwide income to a territorial tax system.

Conducting the review is part of the Working Group Shigemoto gave when he installed them at the beginning of the year. He asked them to specifically create a system that is simple, efficient, fair, competitive, delivers stable revenue and that is acceptable to the politicians and the people. The working group has until the end of 2012 to complete its task.

“It (the new system) seeks to promote a balanced mix of direct and indirect taxes, which contributes to a healthy economy for the Country St. Maarten,” Shigemoto said.

The minister issued early caution Friday that implementing a new tax system would not automatically create a solution for the country’s problems in generating revenue.

“Besides a hopefully more simple and efficient tax system, attention should also be paid to a flexible and effective functioning tax administration, and has already been said, cost saving measures,” the minister said.

Broadening the tax base

Even though finding ways to broaden the tax base is part of the research the committee has undertaken efforts are already underway to do that with the present tax system, which St. Maarten took over from the Netherlands Antilles. This effort includes two initiatives that are part of the wider goal of strengthening the entire tax administration.

The first initiative government undertook is to get USONA to fund a project titled Integrated Coupling System, which will link files across the different government departments with unique identifiers. The second initiative will be the installation of a tax compliance team, which will do field investigations to known tax payers and perform spot checks at businesses that may be operating without paying tax. In the latter instance checks will be made at construction sites, hotels, casinos, bars and restaurants.

“Investment in the knowledge of the tax and audit staff takes a reasonable time effort and also the recruitment of specialized staff as tax inspectors and tax auditors, being both kinds of professionals, considered very scarce on the labor market,” Shigemot said.

 

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