Bonaire, Sint Eustatius and SabaTax Obligations Detailed

As of February 5, 2025, employers in Bonaire, St. Eustatius, and Saba have new tax obligations following the implementation of the 2025 Tax Plan BES. Several changes impact how businesses handle payroll, income tax, and other contributions.

Income Tax

The tax-free allowance is now linked to St. Eustatius's minimum wage, ensuring minimum wage earners are exempt from income tax. The second tax bracket threshold has been significantly lowered to $51,250, taxed at 35.4%, while the first bracket is taxed at 30.4%. Previously exempt, severance pay and pension contributions included in salaries are now taxable.

Property Tax

The property investment scheme duration has been reduced from 10 years to 5 years. The property tax rate for hotels has increased from 10% to 11%.

Revenue and Profit Tax

Businesses face an increased revenue tax rate, rising from 5% to 7.5%. This also applies to individuals receiving profits from shareholdings.

Payroll Administration and Reporting

Employers now have stricter requirements for verifying employee identification. Inaccurate or insufficient identification may result in the application of the highest income and wage tax rates to the employee's wages, with the burden of proof falling on the employer.

Social Security and Insurance Contributions

The employer's contribution to the Healthcare Insurance Act (Zvw) is 6.51% on wages up to EUR 75,864. Employees with other employment income contribute 5.26% on income up to the same threshold. For the General Unemployment Fund (Awf), the contribution is 2.74% for employees with permanent contracts. A higher rate of 7.74% applies for other employment types.

The information provided above is applicable as of February 5, 2025 and might change. It's advisable to verify the most current information with official resources of Bonaire, St. Eustatius and Saba, or consult a local tax advisor. This summary includes updates from recent news and provides the latest available data on the subject.

In 2025, Bonaire, St. Eustatius, and Saba will implement several tax changes impacting residents and businesses.

Income Tax (Inkomstenbelasting)

The tax-free allowance is linked to St. Eustatius's minimum wage, exempting minimum wage earners from income tax. The second tax bracket threshold is lowered to $51,250, taxed at 35.4%, while the first bracket, up to this threshold, is taxed at 30.4%. Exemptions for severance pay and pension entitlements within salaries are removed. The tax-free allowance for 2025 is set at $20,424, but this might be adjusted if the minimum wage changes. The definition of "main residence" is clarified to mean "primarily available to the taxpayer," impacting interest deductions on multiple properties.

Property Tax (Vastgoedbelasting)

The property investment scheme, which provided exemptions, is reduced from 10 to 5 years. The property tax rate for hotels increases from 10% to 11% based on a fictional income of 4% of the property value.

Revenue Tax (Opbrengstbelasting)

The revenue tax rate on profit distributions and income from substantial interest increases from 5% to 7.5%. The revenue tax due upon fiscal emigration of a corporation is no longer deductible from personal income tax.

Wage Tax (Loonbelasting)

Several changes also occur to the wage tax or loonbelasting. The low contribution rate for the General Unemployment Fund (Awf) is 2.74% for employees with permanent contracts, while the high rate is 7.74% for other contracts. The employer's levy under the Healthcare Insurance Act (Zvw) is 6.51% on wages up to $75,864. Insured persons with other employment income pay a 5.26% income-related contribution on income up to $75,864 for healthcare insurance. There is also guidance surrounding cost allowances: certain allowances like phone, study, travel, and home workspace costs can be tax-free under specific conditions. There are also particular guidelines surrounding the valuation of benefits in kind such as company cars, housing, and meals.

It is crucial for employers and employees in Bonaire, St. Eustatius, and Saba to be aware of these changes for the 2025 tax year. More detailed information can be found on the Belastingdienst Caribisch Nederland website. As of today, February 5, 2025, this information is believed to be accurate but might be subject to adjustments or further clarifications. For personalized advice, consulting a tax advisor is highly recommended.

The Caribbean Netherlands islands of Bonaire, Sint Eustatius, and Saba (BES islands) utilize a General Expenditure Tax (GET), locally known as Algemene Bestedingsbelasting (ABB), rather than the Value Added Tax (VAT) system common in other regions. This tax applies to both imported and locally supplied goods and services.

Bonaire

• Standard Rate (Goods): 8%
• Standard Rate (Services): 6%
• Insurance Services: 7%
• Exports: 0%
• Additional Rates: Special rates exist for specific goods like passenger vehicles.

Sint Eustatius and Saba

• Standard Rate (Goods): 6%
• Standard Rate (Services): 4%
• Insurance Services: 5%
• Exports: 0%
• Additional Rates: Similar to Bonaire, specific rates apply to items such as passenger vehicles, with potential variations in other categories.

GET Registration Thresholds & Requirements

• Mandatory Registration: Producers of goods, service providers, and importers in the Caribbean Netherlands are generally required to register for the GET, irrespective of their turnover. An entrepreneur is defined as an individual independently operating a business or practicing a profession within the Caribbean Netherlands, or any person continuously utilizing an asset for income generation.
• Turnover-Based Exemption: Businesses with an annual turnover of $20,000 or less may qualify for an exemption from GET. However, this information is outdated and may not be current.
• Voluntary Registration: Overseas companies cannot voluntarily register for GET in the BES islands. There's no threshold-based registration. They must register if they carry out taxable activities.
• Fiscal Representative: Information about whether an overseas company needs to appoint a fiscal representative is not available in provided sources.

GET Filing & Deadlines

• Tax Return Deadlines: Information on specific deadlines for filing GET returns is unavailable in the provided sources. Further research specific to each island (Bonaire, St. Eustatius, Saba) is advisable to determine the exact deadlines.
• Penalties: Penalties apply for late or non-filing of tax returns. Some sources mention a maximum penalty of $1,400 for late filing, but the exact amounts and regulations may vary. Consult official local tax authorities for current penalties.

Exempt Goods and Services

• Specific examples of goods and services exempted from GET are inconsistent across the provided sources. Some sources mention basic foodstuffs and medical services as potentially exempt. Always confirm with official local tax authorities for the most up-to-date list of exemptions.

Additional Considerations

• Transfer Tax: A separate transfer tax applies, payable by the recipient of the goods/services, and needs to be included in the tax return of the receiving party.
• Property Taxes: Property tax rates may differ across the islands, particularly for hotels, with potential changes in rates occurring over time. Specifics about property tax rates are not available in provided sources.

Note: This information is current as of February 5, 2025, and may be subject to change. Consult with local tax authorities or a tax advisor for the latest regulations and details specific to your situation.

Tax incentives in Bonaire, Sint Eustatius, and Saba primarily focus on attracting investment and stimulating economic activity. Specific details on these incentives can be challenging to find comprehensively in publicly available resources. However, some key areas and examples include:

Tax Relief for Businesses

• Investment Schemes: St. Eustatius, for example, has offered investment schemes that provide tax breaks, although the duration of these schemes can vary. Historically, schemes have offered tax benefits for up to ten years, but this has been reduced to five years in some instances. These schemes aim to accelerate economic growth by incentivizing investment projects.
• Bonded Warehousing: Businesses in the Caribbean Netherlands can utilize bonded warehousing for goods and services, offering opportunities to defer or reduce certain taxes and duties. This mechanism can be particularly advantageous for import-export operations and businesses involved in international trade.

Tax Relief for Individuals

• Tax-Free Allowances: There's a tax-free allowance aimed at protecting low-income earners. In St. Eustatius, this allowance is linked to the legal minimum wage, ensuring that those with lower incomes don't face a tax burden. This allowance is also subject to annual adjustments to keep pace with economic changes.
• Expatriate Rulings: Specific tax benefits are available for expatriates meeting certain criteria, such as a minimum income threshold (e.g., USD 83,500 annually) and not having worked in the Caribbean Netherlands for a certain period (e.g., five years). These benefits can include tax-free allowances for school fees, fringe benefits, removal costs, and initial housing and rental car expenses. Net wage contracts are also possible under these rulings.
• Cost Allowances for Employees: Employers can provide tax-free cost allowances to employees under certain circumstances. These can include allowances for phone, study costs, travel expenses (including meals), representation costs, and home workspace expenses. Tax-free contributions to employee pension plans are also possible under specific conditions.
• Benefits in Kind Valuation: Optimizing salary packages with benefits in kind can lead to tax savings for both employers and employees. Specific calculation methods for benefits like company cars, housing, or meals can minimize tax liabilities.

General Tax Information

• General Consumption Tax (ABB): The ABB is the primary indirect tax in these islands. Standard rates are generally 4% for services and 6% for imported and locally manufactured goods. Specific rates exist for certain items, such as insurance (5%) and passenger vehicles. Exports are generally exempt.
• Real Estate Tax: Levied annually on income from certain immovable properties. The tax is calculated based on the fair market value of the property, with effective rates varying (e.g., 0.4% for hotels, 0.8% for other properties). Tax-free thresholds apply.
• Revenue Tax (Similar to Dividend Tax): This tax applies to profit distributions from resident entities and is subject to change. Recent increases have moved the rate from 5% to 7.5%.
• Other Taxes: Other taxes include excise taxes (e.g., on gasoline), transfer tax on real estate (e.g., 5%), and social security taxes.

Note: This information reflects the situation as of February 5, 2025, and may not capture all available incentives or the most recent updates. Consulting with local tax authorities or advisors is highly recommended for the latest details and personalized advice.