Fiscal non-residents to be taxed at rate of residents

MARIGOT--The Territorial Council at a plenary session on Thursday, November 20, re-voted and adopted the deliberation already decided at the last session on October 30, whereby fiscal non-residents living in St. Martin less than five years will be taxed at the same rate as residents if receiving at least 75 per cent of their income derived from St. Martin.
This income tax will be paid in 2016 based on declaration of 2015 revenue.
The re-vote was necessary due to the omission of when the new law would go into effect.
Although the motion was passed by the majority Opposition Leader Daniel Gibbs argued the decision circumvents the five-year residency rule stated in the Organic Law and is therefore illegal.
"The condition of the five-year rule is obligatory in the organic law," he insisted. "I have read it over and over. You need to be resident in St. Martin for five years first to benefit from our tax system. If not, you are taxed by your country of origin. I don't think this will pass the Contrôle de Legalité."
Director of the Collectivité's Financial Department on tax matters Odile Vainqueur confirmed, however, that a provision in the Organic Law, when it was last modified in 2010, made an allowance for this.
"The Collectivité obtained from the State in 2010 permission to tax those non-residents only on revenue coming from St. Martin. We did not have this in the beginning. So we can tax those people who are non-resident and do not have five years, but only on revenue on St. Martin. Their tax will be calculated the same way as for residents of St. Martin."
Previously non-residents came under different rules from those applicable to households with tax domicile in St. Martin. The rules varied according to the situation of the household. Some were subjected to a minimum tax rate of 14.4 per cent, which does not exist for residents. State services ultimately concluded that the gross revenue the Collectivité is losing because of the special calculation rules was 15 million euros. It was, therefore, proposed to end the anomaly by treating non-residents as residents.
On the second deliberation, Councillors adopted the tax rates for 2015 and these have remained the same as last year, some of which have not changed since 2008. These concern tax on properties, tax on businesses (droit de licenses et contribution des patentes), tax on garbage and other taxes to finance the Chamber of Commerce.
Gibbs was again critical of taxes imposed by the Collectivité. "We are putting the same pressure on the population plus we are adding new pressure," he said. "Instead of reforming our fiscality since we had the competence to have something more uniform; what we are doing is maintaining our old taxes, but raising the percentage on other taxes. It's just more pressure."
Councillor René-Jean Duret commented for the majority: "What we are seeking in our taxation is evolution not revolution. The ratio between direct tax and indirect taxes, which was 60/40 in 2010, has been reversed to 40/60 in four years. We will continue to strive to reduce the weight of direct taxes, trying to remain competitive compared to our neighbours and to be more attractive for investors inside and outside.
"But, regardless of taxation implementation our main two concerns in balancing the budget are still to address the deficiencies and failures of the State's tax services in recovery and control of taxes; and, on the other hand, address the tax incivility of the population."
The Daily Herald

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