Statute and Taxation

Recently, the Statute celebrated its 70th anniversary. Rightly so, this milestone did not pass unnoticed. It is an important document, although I believe modernization is warranted: the world today is vastly different from that of 1954, and thus a different statute is fitting. But that's beside the point.

In recent times, there has been much discussion and writing about the Statute. In this regard, I also think of the unsolicited advice from the Council of State (Raad van State), as well as the substantial book 'Last or Lust', to which, among others, the editor-in-chief of AD, Mike Willemse, contributed. What struck me in all these verbal and written expressions is the almost complete lack of attention given to themes such as the economy and finances of the Caribbean (is)lands, and more specifically to taxes. This is surprising. After all, one of the most crucial means to enhance the prosperity and well-being of citizens is a healthy economy and a sound financial and fiscal system. In this regard, the (is)lands can certainly help each other, but the Netherlands could and should also support the Caribbean territories much more. Not to impose the Dutch system: given the many shortcomings of that system, there is no reason for that. Moreover, it is particularly dangerous to transfer various (good) Dutch fiscal rules directly to the Caribbean Kingdom. The society in the Caribbean part of the Kingdom is quite different from the Dutch. That said, the Dutch government indeed possesses a wealth of high-quality knowledge about economics, finance, and taxation. It seems logical to me that within the Kingdom, and based fundamentally on the Statute, assistance and support are provided in these areas. This is also happening in the BES, although this is a somewhat different trajectory: the BES legislation is simply Dutch law, and this also applies to the fiscal BES system. However, I have the impression that European Netherlands operates too independently here, without paying sufficient attention to local wishes and needs. Take the BES Tax Plan 2025, in which, in my view, an unheard-of number of legislative changes are included, with increasingly more Dutch elements. I strongly question whether all these kinds of changes are desirable and necessary for a relatively small community like the BES. Stability in fiscal matters is of great value. Various details are not
appropriate.

For the Caribbean countries, the situation is different. To my knowledge, there is hardly any assistance from European Netherlands. It might be that the countries do not need this and prefer to manage their own fiscal affairs. But as mentioned, the knowledge available in the Netherlands could be usefully applied. Not only the knowledge, but also the 'hands': the Netherlands still has nearly 30,000 tax officials, and I don't think it would be a problem for the Netherlands to make some of these available to assist in developing and implementing the fiscal systems of the Caribbean countries. This also applies to regulations arising from the fiscal activities of the OECD. Within the Kingdom, all countries, in principle, adhere to the line that compliance with the OECD's Inclusive Framework is ensured, which, in short, means implementing the rules established by the OECD. These are not formal rules, but they are significant because failing to comply risks placement on a gray or even black list. For Sint Maarten, this seems somewhat different because since 'Irma', we have observed virtually no fiscal developments there, yet it is not on such a list. Whatever the case, since such OECD rules must, in principle, be implemented throughout the Kingdom, cooperative collaboration seems logical to me. Unfortunately, I see little of this.

Another form of cooperation is conceivable between the Caribbean countries of the Kingdom, but also with European Netherlands, specifically in the area of establishing tax treaties. With European Netherlands, because it has a large number of treaties and a wealth of knowledge about concluding treaties. The countries currently have virtually no tax treaties, while such treaties can play a crucial role in the development of economies. Curaçao has taken significant steps in this area in recent years. I have also addressed this in my columns recently. They have done this by developing a fiscal treaty policy, and a number of treaties have already been concluded. Unfortunately, no developments are visible in this regard for the other Caribbean countries. Here, alongside collaboration with the Netherlands and, for example, joint negotiations with third countries, cooperation among the Caribbean countries could also work well: a treaty currently concluded by Curaçao with Suriname, with some adjustments, should also be applicable to Aruba and Sint Maarten. In short, why do the Caribbean countries not collaborate in this area? In the context of the Statute, it is not just about cooperation between European Netherlands and the Caribbean territories, but also about collaboration between the Caribbean parts of the Kingdom. 

Peter Kavelaars is a Professor of Fiscal Economics at Erasmus University Rotterdam and of counsel at Deloitte Dutch Caribbean.