Today, the Minister of the Interior and Kingdom relations, Dr. Ronald Plasterk, has send his conclusion on the issue of double taxation on imports through St. Maarten to the Second Chamber. The letter in Dutch is here.
Below is a non-authorized translation of the letter.
To the President of the Dutch House of representatives
Further to commitments to you to keep you up to date on the issue of double taxation of goods supplied via St Maarten to St Eustatius and Saba, on behalf of the State Secretary of finance, I inform you as follows.
Since the transition this issue is being discussed. At the request of the Minister of Finance of St. Maarten, with the agreement of the Dutch ministries of the Interior and Kingdom relations and Finance, a short study has been conducted to identify enumerated cases in which this double taxation occurs and to suggest possible solutions to eliminate or reduce this double taxation. Based on available facts and circumstances, this study aimed to give more clarity about a long-running discussion between Netherlands and St. Maarten.
The main conclusion is, that only in a limited number of cases, an accumulation of corporate tax (BBO, Sint Maarten) and General Spending tax (ABB, on Caribbean Netherlands) occurs. In most cases, Sint Maarten may not charge BBO (e.g., in the case that goods are carried by residents of St Eustatius or Saba themselves if acquired in a third country) or when on St. Maarten a tax exemption can be applied (e.g.,for basic necessities or for goods that are exported).
Double taxation only then occurs if an entrepreneur or private individual of St Eustatius or Saba buys goods, other than basic needs, from an entrepreneur on St Maarten which does not apply the export tax exemption claims and as far as the value rises above the travelers exemption of $ 500.
In the case that the entrepreneur does not charge the BBO tax, the customer does not suffer double taxation. The export tax exemption included in article 9 of the BBO is sufficiently broadly defined for entrepreneurs in St. Maarten that, in most cases, they will be able to claim exemption of BBO. Therefore it is not necessary to define a wider export exemption as, in fact, virtually, the existing legislation defines an almost integral tax exemption for exports.
However, concrete examples demonstrated that, in practice, legislation, policy and implementation are not always in sync. In this context, it would be good if the Minister of Finance of St Maarten would provide clarity about the scope and the intended functioning of the export tax exemption and communicate this to the St. Maarten businesses. This is not only in the interests of business owners and residents on St Eustatius and Saba, but also improves the functioning of the tax system of Sint Maarten.
Entrepreneurs on Saba and St Eustatius should be more active themselves. By more working together, more pressure put on the entrepreneurs on St Maarten so that better buying conditions can be realized, including the proper application by the St. Maarten businesses of the export tax exemption and to apply this to the purchase prices.
The Minister of the Interior and Kingdom relations,
Dr. Ronald Plasterk, R.H.A.