CBCS President Richard Doornbosch.
PHILIPSBURG--An increase in the foreign exchange licence fee from one to 1.5 per cent is expected to go into effect for St. Maarten and Curaçao this year, Central Bank of Curaçao and St. Maarten (CBCS) President Richard Doornbosch told The Daily Herald on Thursday.
Doornbosch, who is presently in St. Maarten, said CBCS is currently preparing the legislation to increase the licence fee from one to 1.5 per cent. Once the drafting of the legislation is completed, it will be submitted to the Ministers of Finance of St. Maarten and Curaçao. The two countries will be required to further handle the draft legislation, which will have to be passed by the Parliaments of the two countries before it can go into effect. The objective is for it to go into effect this year, he said.
The primary goal is to increase revenue for the government of St. Maarten. The increase is projected to bring in additional annual revenue of around NAf. 10 million for St. Maarten. Government collects around NAf. 25 million in foreign exchange licence fees annually. This figure was lower last year as a result of fewer transactions due to the COVID-19 pandemic.
The one per cent licence fee is currently charged on foreign exchange transactions by commercial banks to clients. It is collected by St. Maarten and by Curaçao and is deposited directly into the treasuries of the respective countries.
In an interview at the CBCS office in St. Maarten, Doornbosch said CBCS had conducted a preliminary analysis of what the economic impact of an increase in the licence fee would be on Curaçao and St. Maarten. The results of the analysis have been sent to each of the Ministers of Finance of Curaçao and St. Maarten.
The drafting of the legislation is expected to be completed in the first quarter of this year. “It’s always tricky to guess when Parliament will handle it, but the objective is to introduce it this year,” Doornbosch noted, adding that as the analysis has not been publicised, he is unable to delve into details.
However, he said, “It is a very small increase” which should be looked at in the correct context. “If you analyse it in isolation, that would have a negative impact on growth, but obviously you need some tax income to provide public services, so it’s really something that you see in the broader debate on the tax system.”
Prior to 1996 the islands had a “foreign exchange tax” (in Dutch: deviezenprovisie) which at one point was 1.3 per cent. In 1996, this became the foreign exchange licence fee, which was lowered to one per cent and has remained unchanged since then.
Finance Minister Ardwell Irion said in November last year that he had given the green light for CBCS to conduct research into increasing the fee and he was, at that time, awaiting the report on this matter.
