KRALENDIJK- The residents of Bonaire, St. Eustatius and Saba will have to pay more to the tax authorities in 2022, over their income over 2021.

As has recently become clear from information of the Belastingdienst Caribisch Nederland, various deductible items have been reduced from 1 January 2022, including the tax-free sum and the elderly person’s allowance.

The tax-free sum has been reduced from $12,575 to $12,198 a year, while the elderly allowance has been reduced from $1,421 to $1,378 a year. The website also mentions the fact that, when it comes to the mortgage deduction, only 30.4% of costs may be deducted. This seems to particularly affect higher income earners, ie those who earn more than 281,921 a year.

Explanation

No explanation about the change in rates has been given. The new amounts have only recently been published on the website of the Dutch Caribbean Tax Office and will come as a complete surprise to most citizens, but apparently also to those in authority on the island.

Although the cabinet in The Hague prided itself with a 10% increase in minimum wages, this increase is not only largely offset by a sharp rise in inflation. It now appears that the tax authorities of the Caribbean Netherlands will also claim a larger chunk of the disposable income.

Trend

The downward adjustment of the deductible items is a break in the trend compared to the past. Since 2010 the tax-free rate has been adjusted upwards annually. Over the past 5 years, the amount has been incrementally increased from $11,873 to $12,575 per year in 2021.

The elderly person’s allowance grew from $1,342 to $1,421 a year over the same period.

An expert consulted by ABC Online Media says he suspects that the adjustment of the amounts are caused by negative inflation in the year 2020. This would now have a delayed effect on the amounts for, among other things, the tax-free sum and the elderly allowance.

Given that inflation was over 4% in the year 2021, the adjustment in the amounts and the increased tax due as a result will come as an unpleasant surprise to many residents