Taxes go down in Saba, Statia

September 04, 2011 3:50 PM

THE HAGUE--The general spending ABB tax on all services in Bonaire, St. Eustatius and Saba will be reduced by two per cent on January 1, 2012.

Also with effect from January 1, 2012, the import tax on cars in St. Eustatius and Saba will be reduced by several percentage points, while several other tax relief measures for the islands will go into effect on October 1 this year. The tax burden will be reduced by US $6 million.

Dutch State Secretary of Finance Frans Weekers announced this in a letter he sent to the Second Chamber on Thursday. Per October 1, the tax-free sum and the allowance for children and the elderly all will be increased by five per cent.

The five per cent increase for children and the elderly will be added to the 5.9 per cent inflation correction that is part of the so-called "quick wins" that Weekers announced following his visit to the islands in June this year. The implementation of the quick wins has been moved up to October 1.
The tariff structure for the import of cars in St. Eustatius and Saba will be adapted. Instead of having to pay 25 per cent import duty, people buying cars on these islands now will have to pay 18 per cent on the first $20,000 Customs value, 22 per cent on the Customs value between $20,000 and $30,000 and 30 per cent for vehicles worth more than $30,000.

Furthermore, the elderly discount in the income and wage tax assessment will be increased from $200 to $1,200 per October 1. The "customary wage" component in the wage tax will be reduced from $20,000 to $14,000. Pension premiums paid by the elderly will be marked as negative income in their tax assessment. Also, people will receive interest on the amount that the Tax Department pays them back too late.

The measure to have the top tariff in the income tax start at $100,000 instead of $250,000 will not be implemented. The property tax for businesses also will not be implemented this year.
The tax relief is the result of extreme concerns expressed by the private sector, government and citizens on the islands, as well as pressure by the Dutch Parliament, which is of the opinion that the new fiscal system should not unnecessarily and excessively hurt the islands.

According to preliminary indications, the ABB tax and excises on the three islands for this year have yielded an additional $10 million. The new fiscal regime that went into effect on January 1 this year should yield a total tax revenue of $52 million for the three islands per year, but it turned out to be more.
However, State Secretary Weekers didn't want to give back the entire $10 million, as he doesn't have a complete picture of the total revenues from the wage and income tax of this year. He also wants to await the intra-departmental investigation by the Dutch ministries into the financial and macroeconomic consequences of the new tax legislation. So the islands will have to do with $6 million for now.

Weekers stated in his letter to Parliament that the Dutch cabinet considered it important to eliminate or soften the major bottlenecks of the fiscal system on short term. The Second Chamber's Permanent Committee for Finance will meet with Weekers next Thursday to discuss the tax regime on the islands, its adverse effects and Thursday's letter of the State Secretary with additional measures. The tax measures will be part of a legislation package that will be presented to Parliament on Budget Day, September 20.

In his letter, Weekers also addressed the complaints about the methods of operation of the Tax Department Caribbean Netherlands B/CN. "We are continuously analysing the execution in a critical manner. B/CN has undertaken various actions to improve the execution and implementation of the new fiscal system and where possible to simplify and clarify it."

There is also extra attention for the way staff of the Tax Department and Customs treat customers. Complaint panels have been established to facilitate periodic consultation with taxpayers. PR efforts will also be intensified.

In Saba, for example, agreements have been made between B/CN and the larger businesses.
"These businesses can, as long as they comply with certain conditions, handle the levying the ABB administratively. As a result, these companies can move their goods from the Saba harbour in a shorter period. This also reduces the logistic pressure in the small harbour and means that there is more space to handle the goods destined for small entrepreneurs, and this in turn reduces the waiting time for the last category businesses and for residents."

3 September 2011