Legislation to change tax rates in Bonaire, St. Eustatius and Saba was approved by the Dutch Senate last Thursday, which has paved the way for the new measures to go into effect on January 1, 2025.

With this last legal hurdle now passed, workers in the Ca­ribbean Netherlands will see the tax-free allowance linked to St. Eustatius’ minimum wage, the highest of the three islands. This means minimum wage workers will not pay income tax on their salaries, while some better paid staff will probably see an increase as the taxable portion of their income will shrink.

However, high-income earners will have less money at the end of the month because the second income tax bracket will be drastically reduced from almost US $323,000 to $51,250. The second bracket is taxed at 35.4%, compared to 30.4% in the first bracket.

The property investment scheme is being shortened from 10 to 5 years, while the property tax rate for hotels will in­crease from 10% to 11%.

Businesses will also be hit by an increase in the revenue tax from 5% to 7.5%, as will persons who receive profits from shareholding.

Severance pay to laid-off workers and pension entitle­ments in one’s salary will no longer be tax-free, as the ex­emptions will expire with the new tax measures.

The Dutch government says the new measures focus on “protecting low incomes and modernising the tax system.” “The government will also monitor the effects of the mea­sures in the Tax Plan BES in 2025. If the measures result in income reductions below the social minimum, it will be ex­amined whether and how these can be corrected,” the gov­ernment said in a press release last Friday. “In addition to income measures, the government will implement technical improvements, such as revising regulations around payroll administration and streamlining tax legislation. This will make the system more transparent and better aligned with practical use.”

The Daily Herald.