Finance Minister: Locals can qualify for tax holidays once legal requirements are met

GREAT BAY--Minister of Finance Marinka Gumbs appeared in Parliament on Monday during a Question Hour requested by MP Francisco Lacroes on the issue of tax holidays, clarifying that the framework is not limited to foreign investors and that locals can also apply once they meet the requirements set out in the law.

Gumbs stressed that eligibility is tied to compliance with the tax holiday legislation, including the requirement that an enterprise be established in St. Maarten and structured as a public limited liability company (NV) or private limited liability company (BV), and that applicants satisfy the conditions contained in the relevant national ordinances.

It should be noted that due to the format of the question hour in Parliament, the Minister could not delve into every detail of every requirement/condition.

In response to questions about whether locally owned companies are eligible, Gumbs referred to the legal framework and stated that an enterprise belonging to an NV or BV incorporated in St. Maarten can be considered eligible once the requirements set out in the applicable national ordinance are met. She also explained how the application process works in practice, saying requests are generally submitted through tax advisors familiar with the forms and requirements.

If an applicant does not have that route, she said requests can be made to the Minister of Finance to obtain the appropriate application form, after which the Cabinet requests the form from the Department of Fiscal Affairs and forwards it to the applicant. She outlined that tax holiday requests are then formally submitted on behalf of the Minister of Finance for further processing, and said her intention is to update and improve transparency by ensuring the forms are also publicized.

On government policy, Gumbs said she does not intend to abolish the existing tax holiday legislation, but instead wants to optimize and modernize the current legal framework by introducing a policy approach that enables a more efficient, transparent, and contemporary application of what she described as an existing yet outdated system. She said one concept to be further researched is requiring recipients of tax holidays to make a measurable contribution back to society, so incentives deliver broader economic and social value. She added that consideration is also being given to differentiated tax tariff structures based on clear and objective guidelines, including the possibility of applying different profit tax rates depending on the nature, scale, and impact of an investment, rather than a uniform profit tax rate.

The minister told Parliament that 10 tax holidays have been granted since 2018. She said the question on the total estimated fiscal impact was submitted to the tax administration and she was awaiting input, adding that due to limitations within the current tax system, the information is not readily available or easily compiled. She said that if and once the information can be retrieved and received, it will be shared with Parliament.

Gumbs repeatedly emphasized that confidentiality provisions restrict what can be disclosed publicly and in Parliament about individual taxpayers. She referenced Article 50 of the General National Ordinance on National Taxes, describing it as an obligation of confidentiality that limits disclosure of taxpayer information. On that basis, she said certain questions could not be answered when they related directly to individual taxpayers, including questions on whether criteria in original decrees were met before extensions were granted, and whether certain taxpayer-specific matters could be confirmed. She also explained that tax holiday decrees are not published because they contain confidential taxpayer information protected under Article 50.

When asked about monitoring and compliance after a tax holiday is granted, Gumbs said the Tax Administration reviews tax returns to verify accuracy and completeness under its authority, but that this review is not part of the tax holiday policy and does not assess job creation or broader economic impact. She stated that at present there is no clear monitoring mechanism in place to structurally track or evaluate the economic outcomes of granted tax holidays after approval. She noted that the economic assessment, including expected employment and investment impact, is conducted upfront by the Ministry of Ministry of Tourism, Economic Affairs, Traffic and Telecommunication when requests are handled.

On enforcement, the minister confirmed that revocation provisions already exist in the legislation in cases of non compliance. She cited Article 6 of the National Ordinance for the Promotion of Business Establishment and Hotel Construction, and Article 2, paragraph four of the National Ordinance for the Promotion of Land Development, as legal bases to revoke granted benefits when conditions are not met. She said these provisions allow government to withdraw incentives in situations such as failure to realize the approved investment, non compliance with employment requirements, or deviation from approved project conditions.

Gumbs also responded to questions about prior reform initiatives and said she was not entirely certain which specific changes a Member of Parliament was referring to regarding a 2019 initiative. She noted that the former Minister of Finance at that time was Mr. Perry Geerlings, and stated that three tax holidays were granted in 2019. She added that, for the record, five tax holidays were granted under the tenure of another former Minister of Finance, and said that since taking office, only one tax holiday has been granted under her tenure.

During the wider exchange, MPs raised concerns about whether locals are being treated as second class citizens regarding tax holidays, including calls to examine how the framework can better support local development, particularly housing. MP Veronica Jansen-Webster welcomed the minister’s openness to requiring a measurable contribution to the community and urged her to also look into tax holidays for local investors seeking to develop land for housing, citing the housing crisis. Other MPs also pressed the issue of equal access and fairness for locals within the framework.

In her closing responses, Gumbs reiterated that some questions could not be addressed due to fiscal secrecy. She also emphasized that tax holidays are granted by national decree and are individually unique in nature, proceeding from Council of Ministers approval to the Governor for ratification. Importantly, she directly addressed the concern about local access, stating that a tax holiday is not intended solely for foreign investors, and that anyone, including locals, who establishes an NV or BV in St. Maarten and meets the conditions set out in the tax holiday legislation may qualify.

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