Plasterk responds to SMA letter

The Minister of the Interior and Kingdom relations, dr. R.H.A. Plasterk, has responded to a letter from the SMA. A copy was send to the Second Chamber. You can read this below (translated from Dutch).

Dear Ms. Johnson,

Thank you for your letter in which you express the problems that the Saba Merchants Association (SMA) is experiencing.

I am convinced that the private sector and the public sector have a significant interest in cooperating. Certainly on an island like Saba, collaboration is essential, given the small scale and the direct effect of each other’s actions. In this context, I take your signal very seriously.

Some of the topics you mention in your letter are being discussed between the National Government and the Island Government of Saba. During the Caribbean Netherlands week (CN-week, 8 to 12 June) the economic developments and potential barriers have been discussed. The ABB and fees for paid employment (IND-leges) that have been increased on January 1, 2015 have also been discussed. In addition, the Kingdom Representative, Mr Isabella, has indicated that he wants to discuss the specific points you mention in your letter with you during his visit to the Executive Council on June 22 and 23.

Needless to say that I point you again to the possible outcomes of the work of the Evaluation Committee Spies. The Commission will present its report in mid-October. My impression is, that besides the political relationships and procedures after 10-10-10, also attention will be paid to socio-economic issues that confront Saba, St. Eustatius and Bonaire. Your letter is also brought to the attention of the Evaluation Committee.

I also like to address the other points.

Relationship with the Executive Council of Saba

Concerning your relationship with the Executive Council of Saba. You describe a difficult relationship between the SMA and the Executive Council of Saba. You will understand that I cannot respond to the qualifications that you allocate to the Executive Council, but your letter makes it clear to me, that there is a tense relationship. Good lines of communication and providing information are of course of great importance to this change process. The responsibility for this is with the Executive Council and yourself. However I want to see how the National Government could help and I am willing to ask the Kingdom Representative to mediate or in another way to help improving the communication.

Competition

You indicated that you want protection for the existing businesses on Saba. Saba has a free, open market. When companies or individuals want to set up a business on Saba, they can do so, as long as the applicable laws and regulations are met. The Executive Council is responsible for ensuring that this can happen in a way that the administrative burden and costs for everyone will be limited as much as possible.

Raising thresholds for (new) companies is not in line with the principles and rules that we have agreed with each other to be applied in the same way for everyone. I have no indication that the system applied by nor the actions of the Executive Council of Saba, have led to selective results.

Tax system, audits and fees for paid employment

The tax system has been carefully designed in good consultation with the Island Council in office at that time. In addition, since the introduction of that system, several times consultations have taken place with many stakeholders. After consultation with and with the agreement of the Island Government, these consultations resulted in several adjustments of the tax system. Some of these adjustments had a temporary nature, such as the temporary (extra) reduced rate in the real estate tax. Other adjustments had a structural character, such as the reduced rate of the real estate tax (initially set at an effective annual rate of 1.0% of the value of immovable property. By 2015 it was structurally set at 0.4% for hotels and 0.7% for other property). Also a structural investment facility has been introduced which ensures that increases in the value of immovable property through investments are exempted of real estate tax for a period of 10 years.

As for your comment about the audits, I note that, of course, it is clear that the situation in the Caribbean Netherlands is very different to the situation in European Netherlands. However, there are also similarities. One of these similarities is, that laws and regulations should be implemented and applied in a good way so that everyone who is eligible for certain arrangements or compensations can actually use these. That includes enforcement and monitoring in respect of the obligations of each party-in addition to the rights- they have. In that context, the tax office/Caribbean Netherlands now has performed some audits/checks, mainly at larger tax payers. Those checks were primarily focused on whether these taxpayers had met their tax obligations in accordance with the rules, but also had the intent to ask any questions and to track ambiguities regarding the implementation and application of tax regulations in practice. Partly as a result, recently an information meeting on Saba and Sint Eustatius has taken place and where the Tax Office/Caribbean Netherlands together with tax advisors have given information about the tax system.

Since 1 January 2015, the fees for paid employment have been increased. Among others, the Executive Council of Saba has, complained about this at the Ministry of security and justice (V & J). This topic has been discussed during the CN-week and the present proposal is to reduce the fee for paid employment as soon as possible from the current new rate. Subsequently, the system for adopting the fees and licensing process will be re-examined in the second half of 2015, including the amount of the fees. The starting point is that the local context will be taken into account explicitly. This is the way that it has been discussed during the CN-week between the Ministry of V & J and the Island Government. It was agreed that, soon, the Secretary of State of V & J sends a letter with the agreements and an associated explanation the respective Executive Committees of the public entities.

Let me close by by concluding that a lot has been done in the areas of economic cooperation and trade facilitation, but also, that there certainly still are challenges. The Central Government is working on the strengthening of the framework conditions for the private sector, for example, also in the areas of infrastructure (telecom, utilities, etc.). Of course, in this process there are considerations for the Central Government and the Executive Council of Saba, but I do not see that the private sector would be wronged on Saba. That said, be aware that I have taken good notion of your letter and that the necessary activities will be initiated to address the bottlenecks experienced by you.

The Minister of the Interior and Kingdom relations, dr. R.H.A. Plasterk