PHILIPSBURG:--- Benjamin& Parker (www.b-parker.com) for the year 2014 has been preparing professionals based upon the envisioned actions by the Tax office of St Maarten to collect taxes due. In the online article in the Daily Herald of Wednesday July 9 2014, under "Dutch assistance for Sint Maarten Tax Office" our office could conclude that earlier envisioned tax conditions in SXM will materialize faster than expected, resulting in a financial catabolism contaminating the business community with a direct outcome in the cost of living level.
The edge of our firm is that our specialists performed over the entire Dutch Kingdom and were witness for the almost 2 decades on the level of impact attributed to Dutch Tax Inspectors intervention.
Bonaire Dutch Inspectors intervention
In the late 80's the first island to receive Dutch Inspectors of the Netherlands (Nederlandse Technische Bijstand NTB) was Bonaire. The Tax office in that time consisted almost of 80% of European Dutch tax officers. The imported Inspectors (with a 3 year rotation) came with a harsh collection attitude where the community was forced to prove how they financed purchase of their cars, and other properties. The collection was conducted in an extreme manner and many taxpayers became desperate to comply with the taxes due. At this time local Banks were offering loans to allegedly ease the liens, embargoes and confiscations. In less than 4 years banks became the biggest real estate of Bonaire as they had liens on so many houses and land that auction was imminent, due to inability to pay by the community. Another unusual condition is that the same Dutch Inspectors were patrolling the streets taking pictures of houses whose owner at a later date, got high assessments and could not pay, making it easy for their "friends in Europe" to bid during auction, or locals were just selling everything to leave the island, resulting that Bonaire erupted with a high population of European Dutch Citizens much before 10-10-10. All elite high turnover businesses and upscale neighborhoods became property of European Dutch Citizen, basically re-colonization by property repossessions. The Bonaire community reacted aggressively and even shots were fired on the house of former Director of Taxes and high function officers at the Receivers' office were assaulted.
Aruban Tax authority collection method
In the late 90's the Tax office introduced the SAB system. The SAB system was the abbreviation for (S)anering (A)chterstallige (B)elastingen. When introduced the results were not according to expectations as it strangled the economy due to the additional financial burden on businesses and the skyrocketing of the cost of living attributed to cash recovery by enterprises. The Government at that time in view of a struggling economy and inability to collect more taxes due , introduced the 70/30 deal. The 70/30 deal entailed that if a natural person paid 70% of his entire tax debt the 30% would be exonerated. The unbalanced measure was criticized by the up to date tax payers and to fuel the unbalance measure the 30% discount benefit which should have been taxed the following year was also exempted from taxation. In 2007 the Government of Aruba after seeing poor tax revenue improvements decided to:
- Eliminate all business investment incentives
- Eliminate fiscal depreciations (Vervroegde afschrijving)
while introduced:
Sales tax of 3%
Higher import duties
Profit tax reduction to 27%
Curacao Tax authority collection method
In the 10 year stretch of 1990-2000, Curacao introduced various tax reforms to expedite tax collection in record times. The economy was not in its peak and therefore another strategy was introduced:
- Increase of payroll tax.
- Introduction of sales tax 2% in march 1998 and that same year in October increased to 5% with an increase of 150% the same year.(this measure was also applicable to Bonaire squeezing the economy more)
The results of these reforms did not produce positive results and Government was obliged to reduce payroll tax levels to secure purchasing capacity of the taxpayer to significant drop in sales tax.
In our courses in SXM we explained our students that every tax action in the former Antilles will result in SXM as well if the indicators are present.
Benjamin& Parker envisions the following condition attributed to the European Dutch Inspectors intervention to secure tax collection:
- Dramatic increase of Tax Audits
- Stretch audit scope from 5 to 10 years as allowed in the General Tax Ordinance
- Demand for bulk tax payments within 3-6 months
- Increasing lien on cars, salaries and properties
- Expedition of Auction processes
- Re-assessment of payroll tax tariffs
- Re-assessment of TOT percentage
- Re-assessment of the Penshonado regulation (Bonaire eliminated benefit)
Envisioned aftermath
- Rapid inflation due to cash recovery by businesses
- Closing of businesses, resulting in unemployment
- Inability of the working class to meet financial obligations
- Exodus to other island for better opportunities
- Early sale of property by locals to secure better price deal
- Poor employment opportunities.
National Budget Deficit balancing
All Dutch Caribbean Governments take unbalanced actions to sanitize the National Budget deficit, but the impact hereof worsen the financial and social conditions for the same community. The solution to this pre-disposed condition is conducting Risk, Efficiency and Cash Recovery Audits by firms with expertise in the field. Practice has shown that the traditional consulting firms lack this expertise and will make unusable researches costing millions with no evident practical solution to the existing cash problems. Is it common practice that Governments prefer to pay Diamond karat prices for zirconium because of lack of understanding?
Benjamin& Parker (This email address is being protected from spambots. You need JavaScript enabled to view it.) has prepared a group of professionals to combat these taxation actions as they were trained based upon hard core taxation troubleshooting of taxation conditioning actions and impact hereof of cases over 2 decades. The CTA's and CTC's are trained to analyze these conditions in which the taxpayer is squeezed out of their resources and will assist the community in their envisioned upcoming problems. The objective of this article is to make the business and community aware of the impact of the Dutch Inspectors intervention and to prepare accordingly for the collection attempts by the SXM Tax Office.