SINT MAARTEN (GREAT BAY) - COCI has taken the stance that the proposed tax risks discouraging both local entrepreneurship and much-needed foreign direct investment (FDI).
Businesses already contend with one of the highest corporate tax rates in the region at 34.5%, and an additional dividend withholding tax would further erode the country’s attractiveness to investors.
Additionally, COCI is concerned that the proposed tax will discourage reinvestments by local and foreign businesses. This concern is particularly since most local SMEs reinvest from profits gained.
As it relates to the foreign investors, it will create a second layer of taxation on profits as a double tax and can create potential capital flight and diminish reinvestment in the local economy by foreign investors.
The risk is further compounded by the fact that if proper agreements are not in place to prevent taxation in multiple territories, the impact of this taxation will have even further reaching effect than outlined here, definitely discouraging investments.
COCI also raises serious concerns about the capacity of the current tax administration system to effectively and fairly enforce new tax measures, citing ongoing administrative discrepancies between the Tax Inspectorate and the Receiver’s Office that have already led to undue burdens on businesses.
COCI also considers the broader economic vulnerabilities that affect our small, open and import-dependent economy. These include the ongoing geopolitical instability, rising oil prices, a fragile labor market, high utility rates, limited incentives for investment, and an already strained taxpayer base.
COCI warns that the proposed tax could exacerbate existing pressures and lead to business closures, with definite immediate impact on the country’s coffers.
COCI has formally expressed serious concerns to the Minister of Finance regarding the Minister’s proposed introduction of a 10% dividend withholding tax per January 1st 2026, in an issued letter.
In the letter submitted to the Minister, COCI emphasized that while fiscal consolidation is important, introducing additional taxes at this critical juncture could undermine economic recovery and growth. “Our business sector, composed predominantly of small and medium-sized enterprises (SMEs), that is still grappling with the aftereffects of global disruptions such as the COVID-19 pandemic, climate-related events, and the ongoing challenges of an already burdensome tax system," COCI noted.
In its communication, COCI advocates for a comprehensive and balanced approach to tax reform that promotes investment for both local and foreign investors, job creation, and long-term sustainable growth, while addressing fiscal needs through broader measures aimed at expanding the tax base and improving administrative efficiency, in support of the enforcement activities now being undertaken.
COCI is not aware of any stakeholder consultations on the subject matter and if conducted COCI was not heard to express a position on behalf of the business community of St. Maarten to be impacted hereby. Legislative changes such as this taxation surely require pertinent stakeholders to be heard.
The Chamber reaffirmed its readiness to collaborate constructively with the government to identify alternative solutions that align fiscal responsibility with the country’s economic development goals.
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