Finance Minister Ardwell Irion ~ Will enable US Pre-Clearance ~
PHILIPSBURG--If a proposal tabled recently in Parliament by Finance Minister Ardwell Irion gets the green light, the United States (US) Customs and Border Protection (CBP) officers who will be operating in St Maarten as part of the US Pre-Clearance operations in the country will be amongst officials who will be granted exemptions from a range of local taxes.
The taxes for which it is proposed that they be exempted from paying include wage tax, income tax, profit tax, transfer tax and motor vehicle tax (also referred to as road tax).
This is part of proposed changes to the tax laws to enable the establishment of preclearance in St. Maarten, to enable the establishment of a World Bank Office in St. Maarten, to implement measures to combat double taxation for temporary short-term activities in the country and to correct omission regarding tax exemption for consular buildings.
Irion told MPs during the meeting held last Thursday that as a result of negotiations held with the United States Department of Homeland Security to revisit the text regarding immunities and privileges stemming from the Pre-Clearance Agreement between the governments of the USA and the Kingdom of the Netherlands (for St. Maarten), it is proposed to implementation legislation for foreign governments and their officers (in this case US Customs and Border Protection officers).
Irion said Paragraph 1 of the text proposed by the US provides that CBP officers enjoy the same privileges and immunities as those accorded to diplomatic representatives under the Vienna Convention on Diplomatic Relations, or the same privileges and immunities as those accorded to consular officers under the Vienna Convention on Consular Relations (Vienna Convention).
“The entire Kingdom of the Netherlands is a party to the latter multilateral treaty,” Irion said, adding that St. Maarten intends to follow Aruba to grant tax privileges/exemptions to CBP officials and CBP buildings pursuant to the Vienna Convention.
“In concrete terms, this concerns exemptions from the following tax types: wage tax, income tax, profit tax, transfer tax, and motor vehicle tax. These privileges/exemptions can only be realised through legislative changes. This is the reason for the present proposal.”
He made clear that in the proposed exemption provisions, reference will not be specifically made to the US and CBP officers, but rather to a foreign government or officials thereof; foreign governments or foreign powers or parts thereof; and a foreign power or officials thereof designated by ministerial regulation.
“For the time being, those regulations will only designate the US for the preclearance activities after the Preclearance Agreement has been signed, but this offers the possibility, if at a later stage another foreign government or power concludes a bilateral preclearance agreement with the Kingdom of the Netherlands for the benefit of St. Maarten, this can also be designated by ministerial regulation,” he said.
Irion had said earlier in the meeting that the measures will fix an omission regarding a tax exemption for consular buildings, consular posts headed by a professional consul officer and other members in keeping with the Vienna Convention.
“With regard to the tax system of St. Maarten, this treaty provision means that acquisitions by the sending state of consular buildings and the official residence of the head of a consular post must be exempt from transfer tax. However, this exemption has not yet been introduced in the tax regulation,” Irion told MPs. “In the present draft, it is proposed to correct this omission.”
The draft legislation also seeks to introduce measures for the avoidance of double taxation for short term, temporary work. “Such double taxation can make it more difficult to attract the necessary foreign expertise and can make reconstruction or … projects more expensive if foreign companies or consultants increase their prices as a result.”
He said it is highly desirable to make St. Maarten attractive for digital nomads – persons who travel around and can earn money along the way thanks to digital means.
“St Maarten has a very limited amount of double taxation treaties. Because of this and the nomads project, it is desirable to avoid double taxation unilaterally. This is proposed to take place by including a provision in the Wage, Income and Profit tax ordinance whereby St. Maarten unilaterally withdraws if the activities in St. Maarten do not exceed certain international customary thresholds.”
