PHILIPSBURG--Finance Minister Martin Hassink provided information to Members of Parliament (MPs) regarding the draft proposal on double taxation (tax treaty) between St. Maarten and the Netherlands during a meeting of the Central Committee of Parliament on Monday.

 

Hassink said the treaty was in conformity with internationally-accepted regulations and generally in line with Organisation for Economic Cooperation and Development (OECD) standards.

 

In giving some highlights of the treaty, he said that while the Dutch dividend on withholding tax currently stood at 8.3 per cent, under the treaty it would be 15 per cent. In “special cases” it will be at 0 per cent. He said too that while pensionable income currently was taxed only at “resident rate,” under the treaty resident and source state will have taxing rights.

 

As it relates to inheritance and gift tax, Hassink said currently the Netherlands has taxing rights for a year after emigration, but under the treaty this period would be extended to five years.

 

Also, tax-exempt entities such as private fund foundations (Stichtingen Particulier Fonds) and trusts (unless they are qualified as “doelvermogens”), exempt companies (Vrijgestelde Vennootschappen) and investment institutions (Vrijgestelde beleggingsinstellingen), will be excluded from certain treaty benefits regarding dividend, interest and royalties.

 

The new treaty contains a “service permanent establishment provision” that if a Dutch resident entrepreneur or enterprise provides services in St. Maarten for a period of more than 183 days during a 12-month period, St. Maarten is entitled to tax the profit earned with those services.

The new treaty also contains an article for the automatic exchange of information between the tax authorities of the two countries, in accordance with the international standard.

 

Hassink said the date on which the treaty would go into effect would depend on date of publication in the National Gazette. Once the treaty goes into effect, the Tax Regulations for the Kingdom BRK will no longer apply between St. Maarten and the Netherlands. For St. Maarten, the BRK will continue to apply with respect to Aruba and Curaçao, until a new bilateral treaty has been concluded, he said.

 

October 8 is the deadline for St. Maarten to give its comments on the treaty that will replace the outdated one. A similar agreement is said to be on the table for ratification between Curaçao and the Netherlands.

Several MPs posed questions about different aspects of the treaty. One MP wanted to know the financial implications of the treaty and whether it had been discussed with stakeholders.

 

Minister Hassink said it would be difficult to determine the financial consequences, which he later said would be minimal and negligible. He noted that discussions with stakeholders were not usually held regarding issues such as this one.

 

The Daily Herald