IMF Recommends Reforms For Curacao, St Maarten, (Sep 27, 2024)
The International Monetary Fund has released a series of tax policy recommendations for Curacao and Sint Maarten, in its recently released combined Article IV report for the two territories.
For Curacao, the report notes that the territory has improved tax administration, including strengthening audit capacity. Meanwhile, the automatic withholding of sales tax has been delayed allowing for a smoother technological adoption by banks. The authorities are preparing for the introduction of a value-added tax after the 2025 general elections, the IMF said. www.stmaartennews.ai www.sxmnews.ai
Supporting these efforts, the report says: “The envisaged tax reform, including the possible introduction of a value added tax, could further improve efficiency and equity, modernize the tax system, and compensate for personal income tax shortfalls, while weighing efforts against a relatively high tax burden compared with peers.”
For Sint Maarten, the report recommends that policymakers should ditch plans to lower tax rates, proposed to make the country more competitive with neighboring islands. The IMF said this would reduce government’s revenues and endanger fiscal sustainability.
It recommended that the territory should tax casinos’ profits, turnover, and winnings; enforce 5-percent sales tax on short-term rentals, and income and profits tax on the proceeds from such rentals; update the price of land leases; and institute a tourist levy at the airport.
In respect of the gambling tax, the IMF recommended imposing a 12.5 percent withholding tax on all gambling winnings (to be collected by the casino and remitted by the casino to tax administration). In the case of nonresidents, the withholding tax would be a final withholding tax. In the case of resident taxpayers, the withholding tax would be non-final, with final adjustments made as part of income tax filing.
