Dear Editor,
There is this constant cry from the public for Justice Minister Nathalie Tackling to bring the crime situation under control. The focus primarily surrounds the following matters: excessive use and possession of illegal firearms, reckless scooter riders and robberies. These three issues are intertwined, and so it is easy to understand the motives and the gravity of each situation.
With reference to the illicit guns, this state of affairs has spun out of control for more than a decade - way before this minister dreamt of occupying her current position. The question is: What have the other justice ministers done to curtail this alarming situation, and is the public being fair to whom they are directing their demands? Because, it seems as though they expect the minister to tackle every single issue, all at the same time, when it is impossible for her to do so.
Yes, the level of crime is out of control, but what is the role of the police force, the customs department and the coastguard? Aren’t they the ones who are (on a broad scale), responsible for making sure that the laws of the land are being upheld? So, why is it that the population does not focus their attention on the effectiveness of these three organizations, with regard to tackling crime?
If these institutions were managed efficiently, crime would have been on the decrease, significantly. So, does the success of combating crime rest solely on the shoulders of the minister, or does a large portion of this achievement depend mostly on how the directors of these critical organizations manage their individual institutions?
I’m not sure who runs the customs and the coastguard, but Chief Commissioner Carl John manages the police force, and for sure, his management style is yet to be desired. Usually, whenever there is crime of this magnitude, the chief of police addresses the public to condemn these types of activities. With all the rapes, murders, domestic abuse, child molestation, robberies, untimely deaths of scooter riders, have the population heard him denounce any of these acts? Nope!
Instead, he sits in his office with this “don’t-care attitude,” but the public expects the minister of justice to fix it. How come the attention is not on him? Where is the collaborated effort with the customs and the coastguard to combat this monster? Frankly, I think that the police chief needs to step down and allow someone with the capability to direct the police force, where police officers feel motivated to do their job optimally, and be appreciated for doing so.
On Monday, January 26, 2015, I wrote an article entitled, ‘Retrieve the country or lose it to criminals.’ I started out by saying: “Generally, whenever a country is overrun with weapons and criminal activities, persons of position and power are directly involved. Who they are, and how they manage to remain undercover, is the duty of the investigating team to find out. But believe it or not, the radar spans much farther than what meets the eye.”
Again, on Monday, August 15, 2015, I wrote another article entitled “The handwriting was on the wall.” In this article I mentioned that, “Brandishing guns has become the norm, and the fear of law enforcement is no longer visible.” I also quoted ex-police officer and former Member of Parliament Janchi Leonard, who said, “You can go anywhere and find a gun…” “If you want to go tomorrow, you don’t have to know the people dem.”
One year prior, on Thursday, September 25, 2014, I penned an article entitled, “Our security in under siege.” Within that piece I stated, “It appears that we are on the verge of defeat, as criminals are consistently testing the complacency of our judiciary system. These law breakers have set this trend for many years and so there is absolutely nothing new under the sun.”
Today, who are the ones still committing these crimes? They are mostly youngsters. Has the situation changed from then to now? Nope! Why is that? When I summed it up, three possibilities come to mind: The majority of fathers have neglected their children and so they are left to raise themselves; the heads of law enforcement have failed us; and persons in high places are well aware of the origins of these guns.
Minister Tackling, the level of crime has been a plague for quite some time and the appeal to tackle this situation is paramount. Therefore, always look beyond what you see. If I were in your position, I bring in a secretive squad to monitor all areas of law enforcement and a regular independent body, to scrutinize the sources of these guns and the recipients of these weapons that are destroying the foundation of this nation.
Joslyn Morton
Dear Editor,
By now your readers must know that I do not appreciate anyone who writes to you, voicing his/her opinion but then ask of you to withhold their name. That in my opinion is the action of a coward. In today's [Wednesday’s – Ed.] paper the writer is outlining what several of us have written in the past, but were not afraid to let your readers know who we are. This Island Boy is in my opinion displaying lack of maturity by being afraid to let the people know that he is not brave enough to voice his opinion in his own place of birth. That letter should have been an open letter to the Sint Maarten government outlining his grievances, with his name attached to it.
I believe that his points are well taken, but the Island Boy, has not proven himself to be a man. What the Island Boy has done here is exactly what people in government make use of. They will not take him seriously even though what is written is a fact.
They can never say that Russell did or did not say so, because I always add my name to the letters and am ready to accept any backlash. I must add that I have not had to approach you to correct any of my letters to you which you have published. Beside that, why would I go to such length to show people that I don't have any backbone. From what and from whom am I hiding in my own country? From that letter it seems that the Island Boy has potential. So it is time enough for that Island Boy to become a Sint Maarten man.
Russell A. Simmons
Dear Editor,
In 2019 Sint Maarten introduced the Law on the Prevention of Money Laundering and the Financ-ing of Terrorism, which law also amended various other laws, including the trade registry decree (“the Law”). The Law, amongst others, obligates businesses and other legal entities (entities) to register the Ultimate Beneficial Owners (UBOs) of such entities with the Chamber of Commerce. Every registered legal entity is obligated to register the personal information of its UBO(s). Personal information that must be provided is the name, surname, gender, address, the date and place of birth, nationality, sig-nature and initials of a natural person.
Recently the Chamber has informed the general public that entities had to register their UBO’s by July 1st, 2025, or face a fine up to Cg. 50,000.
However, the list of requirements imposed by the Chamber far exceeds what is mandated by law. The Chamber now demands, among other things: the CRIB number of the entity and the UBO(s), a copy of the UBO’s passport, an original shareholders register, and a signed declaration from the UBO stating that they will not engage in money laundering, terrorism financing, or any other illegal activity. If this information is not submitted, the Chamber will not accept the UBO registration. As a conse-quence, the entity will be in default.
There is no legal basis for these additional requirements. By enforcing them, the Chamber is break-ing the law and acting in violation of principles of good governance. Moreover, the Chamber claims that UBO information is accessible only to the Public Prosecutor, the Central Bank, the Financial Intel-ligence Unit, and the Tax Department. In fact, pursuant to Article 11 of the Trade Registry Ordinance, this information is publicly accessible.
One is left to wonder: if these requirements are not grounded in Sint Maarten law, what is their legal basis? It appears the Chamber mistakenly applies Curaçao law, not recognizing that Sint Maarten has been an autonomous country since 10 October 2010. Indeed, all the requirements listed on the Chamber’s website and in its UBO Registry Guide align with Curaçao’s legislation—not Sint Maarten’s.
This situation is doubly concerning because legal entities that wish to comply with their obligations are now forced to submit highly personal data without any proper legal basis or privacy safeguards. Curaçao law includes provisions restricting access to UBO information to authorized authorities. The Sint Maarten law does not. This means that any third party can access this (illegally collected) person-al information through the Chamber’s public registry, exposing UBOs and businesses to significant privacy and security risks.
We trust that the Chamber will acknowledge the gravity of this situation and take immediate steps to bring its practices in line with applicable Sint Maarten law. Should it fail to do so, concerned busi-nesses and their owners may be left with no other option than to seek judicial intervention.
Pieter Soons
Partner at BZSE, Attorneys at Law
Dear Editor,
When will our motorbike riders accept that reckless behavior kills. And when will somebody explain to them that if already since in the 1950s when there were just about one percent of the amount of motorvehicles that there are today, the speed limit was 50 and 30 kilometers per hour, and it did not change, if that should not indicate that driving fast on Sint Maarten is dangerous. Improving on the road pavement does not necessarily indicate that one should drive faster. It is mainly to assure a smooth ride and less wear and tear on the vehicles.
I do not have any statistics on fatal car accidents compared to fatal motorbike accidents but it hurt my heart to hear a person who was told about the latest fatal motorbike accident, respond “D’ain nothin’ new.”
In discussing their reckless behavior in the past I suggested that government should only permit electric bikes with a maximum capacity to be imported. One of the answers that I got was “People got to die from something.” I still believe that sudden death causes trauma. Do we really want to do that to our loved ones?
Another person wanted to know what the people going do with their bikes they already have? Simple, add a transition period to the law. And with the same breath I would add that the same can be done with the size and capacity of heavy equipment and buses. Down-size and give more people work.
If I mention our Prime Minister everyone will know who I am referring to. The same goes if I mention those double-deckers. But in this case it would not be to say anything negative about the owner. I am thinking about jobs for at least two more drivers.
I have reiterated that government has to limit the import of cars to Sint Maarten. Somebody told me last week that Frontstreet is a mess. I would say it differently, but later for that.
Russell A. Simmons
Dear Editor,
It is positive to see ongoing discussions for tax reforms to change the Sint Maarten tax landscape. These changes are long overdue. Though the barrage of information may be confusing for professionals and laymen alike. As Marco Aalbers correctly mentions, the different taxes are intertwined and so are the proposed reforms. Therefore, a stand-alone view per tax leads to an incomplete and incorrect picture of the impact. Which is notable in the potential enactment of a Dividend Tax and the recently proposed profit tax adjustments.
We will now focus on the Dividend Withholding Tax (hereinafter Dividend Tax). Based on the remarks of the Minister of Finance it seems that this refers to the introduction, or actually, the enactment, of “The national ordinance on Dividend Withholding Tax 2000”.
Budget
For budget purposes the Minister estimated a budget by comparing the Dividend Tax with the Yield Tax (in Dutch: “opbrengstbelasting”) on the BES-islands [Bonaire, St. Eustatius and Saba – Ed.]. In first instance this seems as a fair comparison as the Yield Tax can be regarded as a form of Dividend Tax, though with a broader base, as foundations (“stichtingen”) and special purpose vehicles (“doelvermogens”) are included.
Next to that, the Yield Tax was introduced to replace the Profit Tax on the BES-islands. The Dividend Tax is an addition to the already existing tax landscape. In contrast to the Yield Tax, the Dividend Tax is a pre-levy for the local Income Tax and Profit Tax. Therefore, in these situations, it will not lead to additional tax revenue for the government. In this regard, the comparison by the Minister with the wage tax does makes sense, as it also acts as a pre-levy.
In general, Dividend Tax is not levied (or levied against a zero percent rate) in fiscal unity situations nor when the participation exemption applies (locally). Also, and this may seem obvious, Dividend Tax is only taxed on dividends. Distributions from, for example, permanent establishments (branches in layman terms) and private fund foundations are therefore out of scope of the Dividend Tax.
Mentionable exemptions are, (i) foreign shareholders with a 25%+ shareholding as included in the proposed legislation of 2000 and (ii) exempt companies. Also, lower rates may apply within the Kingdom or in case Double Tax Treaties are in place. In short, foreign shareholdings (no branches) with a shareholding of less than 25% will potentially lead to additional tax income. Or not?
Transparent entity
Wait, what about the announced introduction of the transparent company? In short, if you qualify for this regime, a legal entity is treated as a partnership. Legal entities with foreign shareholders that choose this treatment can potentially recognize a permanent establishment in Sint Maarten instead of a legal entity. As mentioned above, permanent establishments are out of scope of the Dividend Tax.
As mentioned earlier, the tax landscape is intertwined. In this case the potential additional budget created can be undone with the introduction of other new legislation.
Timing
It is correct that a timing difference, pulling tax payments forward, does occur. The question is: how much forward. In general, dividends over a year are established during the finalization of the financial statements, which happens in the following year. This is also recognized by the Minister, though interim dividends may occur. The Profit Tax deadline is 30 June and might be extended to 31 December. In practice it often occurs that the financial statements are only finalized after 30 June and even as late as the end of December.
Simplified example for Profit Tax (the receiver and distributer of the dividend are local legal entities), in case the financial statements are finalized by the end of March, which is early and is at the same time that the provisional profit tax returns must be filed. In this case, it is expected that the Profit Tax return will be filed before 30 June, so the timing impact is three months (ignoring the provisional return). Generally, you have two weeks to pay and file the Dividend Tax return, so effectively you gain two and a half months. Of course, it can be that the Profit Tax return is filed in December, in that case you gained eight and a half months (ignoring the provisional return).
In other case, for example within the Income Tax where the payment deadlines are broader, the time gained may be impactful.
Local impact
The Minister mentions that there is no/minimal local impact expected with the introduction of a Dividend Tax. Which might be correct for the total tax burden in case the Dividend Tax acts as pre-levy. But, as the Minister mentions, the legislation has a positive timing and liquidity impact for the government, therefore it obviously leads to negative timing and liquidity impact for local dividend receivers.
The example the Minister gives is correct at the distributing company level. Though not on the receiving end of the dividend distribution the (local) receiver does have the negative liquidity and timing effect.
Next to this, filing and paying a new tax leads to an additional administrative burden for (local) taxpayers and depending on the filing deadline (normally two weeks, which is short) to an increased penalty risk.
0% vs exempt (compliance)
Though the impact may seem the same, the effects of a 0% tax rate and an exemption can be different. If exemptions apply, normally no Dividend Tax returns should be filed when dividend is distributed. When zero percent applies then a Dividend Tax return should be filed. In the proposed legislation exemptions are included.
Though as the Minister introduces this legislation also to enhance compliance, it might be considered to include the zero percent rate. Though this will significantly increase the workload at the Inspectorate of Taxes and potentially lead to confusion for the taxpayer.
Even without the zero percent rate, the new tax will lead to additional work for the tax authorities. Ignoring the timing, it is questionable if the Dividend Tax will lead to significant additional tax revenues and whether these are higher than the additional cost created (for both the taxpayer and Inspectorate of Taxes).
Shifting away from dividend distributions
Additional considerations might be given to how taxpayers will react. Though, certainly not a reason to not introduce new taxes, however these effects should not be ignored. Some obvious examples to mitigate Dividend Tax are:
1. Instead of dividend distributions, loans might be considered.
2. Create a transparent company (or a permanent establishment).
3. Utilize other tax facilities.
4. Instead of distributing dividends, increase salary.
While some of these options may just shift the distribution away from the Dividend Tax to other taxes (potentially against lower rates), others may have adverse timing effects or lead to out-of-scope events.
Keep it simple
The national ordinance on Dividend Withholding Tax 2000 consists of 37 articles. By comparison, the Aruban Dividend Tax only consists of 11 articles (36 at introduction). This difference can be partly explained by the fact that the accompanying legislation in Aruba has been adjusted accordingly. For both business and Inspectorate of Taxes it would be beneficial to simplify the proposed legislation.
Going forward
After reading the above, you may have gotten a negative impression about introducing a Dividend Tax. This is incorrect. A Dividend Tax may have a place in the Sint Maarten tax landscape, amongst others for generating additional taxable income from foreign investors, for improved compliance and for timing purposes.
Declaring outdated legislation applicable, which has been written while the Dutch Antilles still existed and the transparent entity was not yet considered, without updating this legislation, diminishes effectiveness (yield) and disturbs the existing “balance” within the total tax system.
In order to keep calling the application of Dividend Tax moving forward, some reconsiderations are necessary in the author’s view. Luckily, it has been decided to postpone the introduction. So productive discussions can be started to improve the legislation.
Other questions to consider are, is the timing right or should we prioritize other changes first and give the Inspectorate of Taxes and business community ample time to prepare for changes.
In general, introducing new tax legislation does not have an immediate positive effect on tax compliance. Especially if other pillars for tax compliance do not yet have a solid foundation and contradicting legislation (Transparent Entity) is introduced almost simultaneously.
Also grandfathering rules should be considered. This to ensure that there is no doubt how “old” retained earnings, which originated before the introduction of the new Dividend Tax, should be treated. The original legislation for declaring the Dividend Tax applicable contains a one-year grace period to allow companies to upstream these retained earnings free of Dividend Tax. This might be rather short and hurt the liquidity of a company.
We must also consider the recent critical Audit Chamber report regarding the ex-officio assessment process, recent remarks made by COCI, and that (as we understand) the tax authorities are already understaffed. Simplifying the tax landscape will probably have a greater positive effect on compliance and revenue generated, while positively impacting the local businesses. Simplifying the tax landscape will also benefit the Inspectorate of Taxes and will give relief to their workload and can help aligning their internal processes, one of the concerns raised by COCI.
Stefan van Riezen,
Tax Adviser at Grant Thornton Sint Maarten
