PHILIPSBURG--Members of Parliament (MPs) on Wednesday unanimously approved the draft national ordinance amending the General National Ordinance on “Land Taxes” (general taxes) in connection with international obligations, with thirteen votes for and no votes against.
The passing of the law means that St. Maarten will avoid being blacklisted by the Organisation for Economic Cooperation and Development (OECD) and the European Union (EU).
Also approved unanimously was a draft amendment presented by United People’s (UP) Party MP Rolando Brison to this law with 13 votes for and 0 votes against.
Brison submitted an amendment proposal to the draft on November 6, 2019, based on concerns he had regarding the sharing of personal data of account holders at financial/banking institutions.
The amendment concerned Article I, part B and article 61a of the draft ordinance. However, based on concerns from the Department of Fiscal Affairs, Brison agreed to withdraw his amendment and reformulate it. The reformulated amendment was approved on Wednesday together with the draft ordinance.
The Group of Twenty (G20) finance ministers and Central Bank Governors on April 19, 2013, endorsed the automatic exchange of financial information as the expected new standard. These parties recognised that through the adoption of a common approach to automatic exchange of information, offshore tax evasion can be tackled most effectively while minimising cost for governments and financial institutions.
With the strong support of the G20, the OECD together with G20 countries and in close cooperation with the EU and other stakeholders has since developed the Standard for Automatic Exchange of Financial Account Information.
St. Maarten was urged to commit to this Standard and committed after taking into account the negative consequences of not doing so.
Based on existing legislation, government could not currently fulfil the obligations resulting from that agreement. In the absence of legislation, local financial institutions were not authorised to automatically provide government with information available to them from account holders.
For this reason, the draft national ordinance amending the National Ordinance on General (Land) Taxes with regard to international obligations contains the high-level collection and annual reporting requirements, such as the scope and provisions to enable the subsequent introduction of the more detailed reporting requirements.
During the earlier stages of the matter being brought to parliament, a motion to suspend the handling of the legislation was passed pending further clarification of the Common Reporting Standard (CRS).
Assistance from the Global Forum of the OECD was sought to address Parliament regarding the content, validity, urgency and importance of CRS and the corresponding consequences of non-compliance.
OECD agreed to assist and on December 11, 2018, OECD representative Radhanath Housden addressed Parliament regarding their concerns.
Housden informed Parliament that the OECD Global Forum does not decide what happens to St. Maarten in the event that the CRS legislation is not approved by Parliament.
The function of the Global Forum is to report information of the status to the peers and the peers decide how they interpret this. Besides the peers, the G20 Initiative and EU Initiative also decide what they do with this information. According to Housden, it is already a fact that St. Maarten is late and he advised implementing the legislation as soon as possible. Other jurisdictions would want to know that other peers are also delivering on their commitments made in good faith.
Given the G20 criteria, CRS information exchange should have been realised by September 2018. However, due to Hurricane Irma in 2017, St. Maarten requested an extension until 2019.
As St Maarten has not completed the requirements to implement the Automatic Exchange of Financial Account Information AEOI Standard, as committed to, St Maarten will consequently be reported by the OECD as a jurisdiction that has not satisfactorily implemented tax transparency standards according to the criteria set by the G20 leaders.
Housden advised St. Maarten to implement some form of information exchange by 2019, considering the fact that the required CRS legislation was not yet in place.
