Shigemoto pledges to not “adversely affect” Dutch territoriesPOSTED: 06/21/11 1:34 PM
St. Maarten – Finance Minister Hiro Shigemoto has promised Dutch State Secretary of Finance Frans Weekers that while St. Maarten’s new tax system will be competitive, he’ll do his best to ensure it does not “adversely affect” Bonaire, St. Eustatius and Saba. The pledge was made at a meeting on Monday where Shigemoto said that the new system should be ready in 2013.
Dutch State Secretary of Finance Frans Weekers and Finance Minister Hiro Shigemoto have agreed to have technocrats work out the details of a double taxation agreement. Recognizing a need for handling the matter quickly parties have agreed that a technical working group from the Netherlands will come to St. Maarten next week to continue with the discussions.
The agreement will cover the transshipment of goods between St. Maarten and Saba and St. Maarten and St. Eustatius. Because there is no agreement St. Maarten charges its five percent turnover tax and then a further tax of just over six percent is charged when the goods reach their final destination. That would end at the moment there is an agreement.
“According to international standards the country of destination is where the taxes are applied and the transfer country – St. Maarten in this case – would not be able to charge taxes,” Weekers said.
Shigemoto says while he understands the standards and wants to live up to them the eventual agreement must not harm St. Maarten’s efforts to keep a balanced budget.
“At the moment the cost of implementing this measure has not been fully calculated. The Dutch have said it will be minimal, but I reminded them that I have to deal with very strict budget controls,” Shigemoto said.
He added later, “Whatever loss in income has to be recovered in order for the budget 2011 of Sint Maarten remains in accordance with the rules of financial supervision.”
Parties have agreed to handle the matter as a priority but Weekers believes there will not be an immediate solution.
“I am glad for the agreement that our technical working group can be here as early as next week, but I certainly can’t promise there’ll be a solution next week,” Weekers said.
Weekers also informed Shigemoto, based on comments by the latter, that the Dutch Minister of Economic Affairs Maxime Verhagen is planning to send a letter soon outlining the Dutch government’s plans for electricity and water generation and distribution in Saba and St. Eustatius. St. Maarten based GEBE performs those tasks on the two islands and incurs losses while doing so. In the past the company subsidized the losses with revenues from St. Maarten, but the concession that took effect on January 1, 2011 forbids them from doing so. Instead the company must direct all revenue earned here to providing affordable prices to the residents of St. Maarten.
“Some solution must be sought and arrived at for the coverage of the deficits that the population of St. Maarten has to swallow in order for these islands to continue to be provided with electricity and water. While I am sympathetic to the need for these utilities to continue to be provided to our sisters and brothers it cannot be at the cost of our consumers,” Shigemoto said.
New Tax Arrangement
Weekers and Shigemoto have also opened a discussion on a new Kingdom Tax Regulation (BRK). A group of technocrats from the Dutch Finance Ministry will be here next week to continue the discussions on what will be a replacement for the agreement that existed with the Netherlands Antilles. The latter entity reportedly collected 150 million euro and paid out all of it to Curacao. St. Maarten never got any, “because the island did not qualify.”