The Daily Herald reports today that the hotels in Saba will not obtain a reduction on real estate tax in 2015, Minister of Home Affairs and Kingdom Relations Ronald Plasterk stated in a letter to the Second Chamber of the Dutch Parliament
The Chamber Committee for Kingdom Relations had asked the Minister for a response to a letter sent to the Committee by Saba Business Association (SBA) on September 3. SBA had requested Minister Plasterk to continue the reduction on real estate tax, which was granted until 2014, due to what it described as a far from rosy economic situation of Saba’s hotel sector. The temporary tax reduction, which was put in place in 2011 is set to end in 2015, bringing the real estate tax rate for hotels at 0.4 per cent of the real estate’s value.
In his response, Plasterk said that Secretary-General of the Ministry of Finance Manon Leijten and Secretary- General of the Ministry of Home Affairs and Kingdom Affairs Richard van Zwol has spoken with the business community during their recent visit to Saba. Minister Plasterk said that their recommendations were taken seriously and have led to a reduction in the tax burden, which was financed by the surplus obtained under the new fiscal framework, as compared with the yield of the fiscal system of the former Netherlands Antilles. Under the fiscal system of the Caribbean Netherlands, a one per cent real estate tax was introduced. In the meantime, this tax was reduced to 0.4 per cent for hotels and 0.8 per cent for other real estate, retroactively from 2011.
Besides, increases in value due to renovations are exempted of real estate tax for a period of 10 years. “These measures underlined the special position of hotels and the importance of the hospitality industry for the economy and employment in the Caribbean Netherlands,” Minister Plasterk stated.
As a temporary measure, over the years 2011 to 2014, an additional reduction of the tax rate by 0.2 per cent was introduced, which meant that the effective tax burden over these years was set at 0.2 per cent for hotels and 0.6 per
cent for other real estate.
The temporary reduction on the rate was introduced because the real estate tax assessments for 2011 and 2012 could not be levied until in 2013, which led to the imposition of real estate tax for both 2013 and 2014 within a relatively short period. This was caused by the fact that it took time to build an inventory of real estate in Bonaire, St. Eustatius and Saba and also to make the necessary assessments of the value of all these buildings, Plasterk explained.
For example, the owner of a hotel with a value of US $1 million pays currently $2,000 in real estate per year. The owner of a $3 million hotel pays $6,000 annually. From 2015, these amounts will be $4,000 and $12,000 respectively, Minister Plasterk calculated. Based on this, he said he could not fulfil SBA’s wishes to extend the temporary reduction on the real estate tax rate with another year.
Plasterk said he would inform the evaluation committee of SBA’s willingness to contribute to the evaluation of the new constitutional structure of the Caribbean Netherlands.