Adoption of the US dollar by Bonaire, St Eustatius and Saba

On January 1, 2011 the Netherlands Antillean guilder was replaced by the American dollar in Bonaire, St Eustatius and Saba. This means that the US dollar has become the legal tender on the islands with the Netherlands Antillean guilders discontinued as legal tender on February 1, 2011. This included all bank balances being converted into dollars with the conversion rate being the fixed exchange rate between the Guilder and the Dollar set in 1971.

As of October 10, 2010 Bonaire, St Eustatius and Saba became a part of the Netherlands with new constitutional status in the Kingdom of the Netherlands.

Tax System

The tax system existent on October 10, 2010 was maintained until January 1, 2011 in which a new tax system was enacted for the three islands. The new system introduced a flat-tax regime and a 0% profits tax regime with the goal to reduce taxes for residents, stimulate the local economy, and to make the tax system transparent.

The reason why a flat-tax regime will work in this instance is because of the small gap between high income earners and low income earners.  It is also being used as a sort of experiment to see whether or not such a system can stimulate the economy and potentially serve as a role-model for a tax regime change in the Netherlands.