Gumbs outlines ‘Stabilize, Repair, Reform’ roadmap for St. Maarten tax system

GREAT BAY--Minister of Finance Marinka Gumbs says St. Maarten’s tax reform will be implemented through a series of legislative, administrative and technological changes rather than one comprehensive tax package, describing Government’s approach as a process to “stabilize, repair and reform” the country’s tax system.

Gumbs said the first objective is to strengthen compliance and collection so that taxes already legally due to Government are actually collected. The second phase involves repairing outdated systems, legislation and administrative processes, after which Government can move toward broader changes to the structure and rates of taxation.

The Minister said Government does not want major tax-policy decisions to be based on assumptions. Reliable data will be needed to determine what proposed changes would mean for taxpayers, businesses and Government revenue before the larger reforms can responsibly be implemented.

Gumbs said tax reform should therefore be viewed by Parliament as a sequence of concrete measures that will come forward as they are ready, rather than waiting for Government to present one large piece of legislation containing every proposed change.

Among the legislative priorities identified by Finance are a draft National Ordinance on Tax Reform, a revision of the formal tax law, proposed gambling-tax legislation and legislation already brought to Parliament concerning the repeal of land tax and abolition of inheritance tax.

Government is also reviewing the country's profit-tax rate. Gumbs told Parliament that Finance is actively examining a reduction aimed at improving St. Maarten's competitiveness within the Caribbean and encouraging greater compliance.

Any reduction, however, would be introduced gradually and would have to take Government's overall revenue position into consideration. Gumbs said Government has not assumed that a lower profit-tax rate would automatically generate higher compliance or collections, and stronger enforcement is therefore being pursued separately.

The Minister also confirmed that the proposed dividend withholding tax remains part of the wider reform discussion. A follow-up meeting requested by Parliament has not yet taken place because Government decided, following parliamentary feedback, to further review the proposal and present it together with the proposed profit-tax reduction.

According to Gumbs, that legislative package is still being finalized with the assistance of a tax expert. Once the work is completed, Government intends to return to Parliament for further consideration and a technical explanation of the proposals.

A major part of the reform will involve replacing outdated technology within the Tax Administration. Gumbs confirmed that implementation of the new integrated tax system is scheduled to begin in the first quarter of 2027, but the different components will be introduced in phases rather than simultaneously.

The first major module, dealing with taxpayer management together with the relevant portion of the taxpayer portal, is expected to be deployed in the fourth quarter of 2027. Other modules dealing with collections, financial administration, business and income tax, auditing and risk management are expected to follow.

Several improvements are scheduled to begin before the full system is available. Tax-data cleanup is expected to start in September 2026 so that existing records can be corrected and improved before information is transferred into the new system.

Online income-tax filing is also being piloted and is expected to become fully available for the 2026 income-tax filing year. Registration for that service is expected to become available from January 2027.

Government is also working toward automatically processing online business-tax returns into the Tax Administration's back-office system. Gumbs said development has been completed, testing is underway and deployment is expected by the first quarter of 2027, reducing the amount of manual data entry currently required.

Finance additionally plans to introduce Sentoo payments for business taxes to improve the accuracy and efficiency of registering tax payments. Automated processing of straightforward income-tax returns is also planned, allowing the system to assist with assessments and reduce the workload presently carried by tax assessors.

Gumbs said these changes are intended to make filing and payment easier for taxpayers while giving the Tax Administration stronger tools to identify non-compliance, monitor taxpayers, issue assessments and pursue outstanding amounts.

The Minister stressed that the objective is not to place additional pressure on taxpayers who already comply with their obligations. Government wants to ensure that persons and businesses that are not complying are also identified and required to pay what is legally due.

St. Maarten's short-term rental sector will also increasingly come under that compliance effort. Gumbs said Government has not adopted a separate tax specifically for platforms such as Airbnb because operators are already subject to existing obligations, including room tax and income tax.

The immediate problem, according to Finance, is identifying unregistered operators and ensuring that existing taxes are properly declared and collected. Government currently has no reliable estimate of the revenue being lost through non-compliance in the short-term rental sector because the necessary data is not available.

Gumbs said Government has approached short-term rental platforms operating in St. Maarten seeking information that could assist with such an assessment, but those efforts have not yet produced the requested data.

The Tax Administration transformation project is expected to improve Government's ability to identify taxpayers, strengthen registration and enforce existing obligations in sectors such as short-term rentals.

Gumbs also disclosed that the IMF and CARTAC conducted a diagnostic mission of the Tax Administration in March 2026 to assess progress and the sustainability of the transformation program. The mission identified areas requiring improvement, including governance, legislation, staffing, tax administration and information technology.

Further discussions are expected to determine where additional IMF and CARTAC technical assistance could support implementation of those recommendations.

The Minister acknowledged that staffing shortages remain a structural risk to tax reform. External expertise financed through programs including TWO and the Trust Fund is allowing several initiatives to continue despite vacancies, but Gumbs cautioned that this support is temporary and cannot permanently replace Government's own capacity.

Filling critical positions, she said, will remain necessary to ensure reforms can be maintained once external assistance ends.

The visitor tax remains another major component of the revenue strategy, with implementation currently targeted for January 2027, subject to completion of the required legislative and operational preparations. Government continues to exclude anticipated revenue from new measures from its budget projections until the necessary legislation actually enters into force.

Gumbs also said Government is not presently pursuing a separate environmental tax at the country's borders. Instead, the proposed visitor tax is intended to contribute toward the public costs associated with tourism, including environmental impacts, rather than creating an additional border levy.

The Minister welcomed closer cooperation with Parliament on the wider strategic direction of tax reform, including a proposal raised by President of Parliament Sarah Wescot-Williams for Parliament and Government to work more closely on the framework.

Gumbs said this cooperation could help remaining reforms move forward in a more structured and efficient manner, particularly in areas where additional information and analysis are still required.

For Finance, the broader objective is not simply to introduce new taxes. Gumbs said the intention is to create a tax system that is fairer, simpler and more effective, beginning with collecting what is already owed, repairing outdated legislation and systems, and using stronger data and administration to determine what deeper reforms St. Maarten can responsibly implement.

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