PHILIPSBURG--Monday's continuation of the Central Committee meeting of Parliament on the draft 2012 budget was adjourned until Wednesday at 10:00am to give Members of Parliament (MPs) time to review the "hefty package" of answers delivered by government.
President of Parliament Gracita Arrindell adjourned the meeting after deliberations with fraction leaders. MPs now have time to read through the 41 pages of answers and supplemental documents.
MPs will be able to pose follow up questions on the answers received and on the draft 2012 budget in general when the meeting resumes in Parliament House. One pressing question by several MPs dealt with the estimated NAf. 48 million that government intends to collect in "real estate taxes" aimed at non-resident property owners.
Answering questions on the topic posed by Democratic Party (DP) MP Leroy de Weever, independent MP Frans Richardson, National Alliance MPs William Marlin and George Pantophlet, the Finance Ministry said this "income tax" is based on the number of non-resident condo owners, the average rental income in high and low season, percentage of tax, among other items based on a survey held in 2011.
Based on the calculation, the ministry said it anticipates an amount of income tax at NAf. 9.7 million yearly. Going back five years, this means a maximum amount of NAf. 48.5 million is owed. In the budget, "a conservative amount" is taken into account: NAf. 21 million.
Persons residing outside of the country who derive income from immovable properties here are subjected to tax in St. Maarten, the minister explained. Whether or not these people are paying tax in their country of residence is not relevant for the enforcement of St. Maarten's domestic tax law.
In the event that St. Maarten requires the assistance of the tax authorities from other countries in the determination, assessment or collection of St. Maarten taxes, such a request will be made to tax treaty partners.
As for United States citizens possibly facing double taxation, the finance ministry said: St. Maarten does not have a treaty for the avoidance of double taxation or non-taxation with the US.
Furthermore, based on the international principles on double taxation regarding income derived from immovable property, the state where that immovable property is situated has the right to tax (the so-called lex situs rule).
When double taxation occurs, it is primarily the resident state; in this case the US- that should avoid it by exempting the income derived from foreign immovable property from their national tax base.
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