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Weekers Unveils Stimulus Package For Dutch Caribbean

by Ulrika Lomas,, Brussels

17 October 2012

Dutch Financial State Secretary Frans Weekers has recently unveiled details of a package of targeted fiscal measures designed to boost the economic development of the Netherlands Caribbean and to increase the purchasing power of islanders.

According to the Dutch finance ministry, a consensus on a package of amendments to the Netherlands Caribbean fiscal system was reached with a delegation from the islands of Bonaire, St Eustatius and Saba.

The ministry explains that basis of the meeting was an agreement brokered in 2010, namely that income from the new tax system introduced in 2011 is to equate to income generated by the previous tax system, taking into account inflation.

Highlighting the fact that the new fiscal system generated around USD5m more in 2011 than previously anticipated, predominantly due to additional income derived from property tax, the Dutch ministry emphasizes that the supplementary income has therefore provided the scope to improve the tax system.

The package of agreed measures includes plans to extend the number of products currently exempt from general expenditure tax, to reduce the excise duty on fuel by 10 cents given the lack of public transport on the islands, and to exempt the first USD50,000 of the value of second homes from property tax.

The package also provides for the introduction of price controls to ensure that the planned tax cuts lead to lower prices for consumers.

Other initiatives contained in the agreement and intended to boost the economy of the islands pertain to property tax. Provisions provide notably for a reduction of the property tax rate from 1% currently to 0.8%, due to the higher income from the levy. Given the importance of the hotel industry for the islands’ economy, the provisions include plans to stimulate the development of this sector by halving to 0.4% the property tax imposed on the sector.

Finally, investments aimed at improving the value of property, notably renovation work and extensions, will be accorded exemption from property tax for a period of up to five years.

Once approved by the Dutch parliament, the property measures are to enter into force with retroactive effect from January 1, 2011, while the remaining initiatives are to apply from January 1, 2013.

Commenting on the “constructive” dialogue, Weekers insisted that the agreed measures will remove a number of “bottlenecks” in the system currently affecting the economic development of the islands and will improve the purchasing power of citizens, namely by lowering the basic cost of living.

Weekers is due to submit the package of measures to the Dutch Second Chamber shortly.

TAGS: individuals | tax | investment | real-estate investment | Netherlands | property tax | real-estate | excise duty | offshore | tax rates | Netherlands Antilles | inflation

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