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IMF Country Report No. 21/231

KINGDOM OF THE NETHERLANDS—SINT MAARTEN

TECHNICAL ASSISTANCE REPORT—SUSTAINABLE TAX REFORMS

October 2021

This Technical Assistance Report paper on Kingdom of the Netherlands—Sint Maarten was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed in March 2021.

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Title Page

FISCAL AFFAIRS DEPARTMENT

Kingdom of the Netherlands—Sint Maarten Sustainable Tax Reforms

Geerten Michielse and David Wentworth

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Technical Report

September 2021

The contents of this report constitute technical advice provided by the staff of the International Monetary Fund (IMF) to the authorities of Sint Maarten (the “CD recipient”) in response to their request for technical assistance. This report (in whole or in part) or summaries thereof may be disclosed by the IMF to IMF Executive Directors and members of their staff, as well as to other agencies or instrumentalities of the CD recipient, and upon their request, to World Bank staff and other technical assistance providers and donors with legitimate interest, unless the CD recipient specifically objects to such disclosure (see Operational Guidelines for the Dissemination of Technical Assistance Information— http://www.imf.org/external/np/pp/eng/2013/061013.pdf). Publication and disclosure of this report (in whole or in part) or summaries thereof to parties outside the IMF other than agencies or instrumentalities of the CD recipient, World Bank staff, other technical assistance providers and donors with legitimate interest shall require the explicit consent of the CD recipient and the IMF’s Fiscal Affairs Department.

Contents

• ABBREVIATIONS AND ACRONYMS

• PREFACE

• EXECUTIVE SUMMARY

• I. INTRODUCTION

• II. TAX REFORM OPTIONS

• A. General Principles

• B. Business Turnover Tax (Belasting op Bedrijfsomzetten; BBO)

• C. Other Indirect Taxes

• D. Wage and Personal Income Tax (loon- en inkomstenbelasting; PIT)

• E. Profit Tax (Winstbelasting; PT)

• F. Tax Holidays

• G. Property Taxes

• H. Casino Taxation

• I. Bank Transaction Taxes

• TABLES

• 1. Sint Maarten Tax Revenues 2016–2020

• 2. Examples of Pensionado Tax Regimes

• 3. Comparison of Standard Taxes and Pensionado Taxes

• 4. Trends in Worldwide Corporate Tax Rates (1980 to 2020)

• 5. Property Taxes in Caribbean Islands

• 6. Gambling Taxation in Select Caribbean Islands

• 7. Summary of TEATT’s Proposed FTT

Abbreviations and Acronyms

Preface

In response to a request from the Minister of Finance, Mr. Ardwell Irion, a capacity development mission from the Fiscal Affairs Department (FAD) of the IMF held virtual meetings with Sint Maarten’s authorities during the period from February 1 – March 15, 2021. The mission comprised of Mr. Geerten Michielse (FAD, Head) and Mr. David Wentworth (STX). The mission provided assistance in assessing the proposed tax reforms in Sint Maarten, focusing on increasing the revenue capacity of the tax system and stimulating economic growth, within the administrative capacities on the island. The mission reviewed various tax reform ideas, including introduction of a general consumption tax, broadening current tax base while reducing tax rates, and introducing a financial transaction tax replacing (part of) the current tax system. Finally, the mission recommends enforcing the existing recurrent property tax and introduce taxing casinos and the winnings as best options.

At the Ministry of Finance, the mission met with Mr. Arno Peels, Acting General Secretary, Ms. Maria Buncamper, Ms. Julisa Labega-Frans, Mr. Janio Chayadi, and Ms. Mercedez James. At the Ministry of Tourism, Economic Affairs, Transport and Telecommunications, the mission met with Ms. Ludmila de Weever, Minister, Mr. Miguel de Weever, General Secretary, and Mr. Jason Lista, Head of the Minister’s Cabinet. At Tax Administration, the mission met with Ms. Sherry Hazel. In addition, the mission met with representatives of the Government of the Kingdom of The Netherlands: Ms. Luz-Stella Dagelet (Adviseur Landen, Ministerie van Binnenlandse Zaken en Koninkrijksrelaties, Directoraat-Generaal Koninkrijksrelaties), Mr. Albert van der Meer (Dutch Tax Administration), Mr. Hans van der Vlist (Dutch Tax Administration, Former Director Tax Investigation Unit), Mr. Frans Hartman (Senior Official, Tax Policy Department MoF), and Mr. Ruud de Swart (Former Deputy Director Tax Policy Department MoF).

The mission is grateful for the efficient support of Sint Maarten’s authorities, especially the Minister’s Office for the assistance in organizing the meetings. Finally, the mission would like to particularly thank Mr. Chayadi and Ms. James in the Ministry of Finance for their extensive consultations and assistance.