TOT adjustment still not clear; correction still to be published

The SHTA understands that the Inspectorate of taxes has sent out brochures in which it attempts to give clarification on the recent changes in the TOT ordinance. We have also learnt that the Inspectorate has tried to clarify the SHTA’s interpretation of the law with the following: 

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"Q. According to the SHTA, the new article 5 implies that imported goods are now subject to ToT, establishing a 5 per cent import duty for resident companies, resulting in an additional layer of taxation. Is this true?

No. The new article 5, section 3, only states that non-resident entrepreneurs that deliver goods and provide services to resident buyers are deemed to be domiciled at the Inspectorate of the Tax Department. This is to ensure that non-resident entrepreneurs, when they are subjected to the ToT, are known to and registered at the Tax Department. This doesn’t mean that the scope of the ToT, which is governed in article 2, has changed. Article 2, section b, clearly states that only when non-resident entrepreneurs deliver goods and/or provide services to resident buyers within the jurisdiction of Sint Maarten, they are subjected to ToT. When a good is imported, the delivery (transport) takes place outside of the jurisdiction of Sint Maarten and therefore not taxed. In conclusion, ToT is not imposed on import of goods."

According to SHTA, the explanation provided by the Inspectorate is incorrect and therefore has created even more confusion and with no correction published as Minister Shigemoto promised in the below press statement on Jan 10, 2011, the uncertainty remains.

"There is indeed an omission in the ordinance, but that would be solved via what is known as a ‘reparatiewet’ or corrective law. Even if this reparatiewet was not done, which it will be done, even in such a situation the current law would not have led to the undesired situation as presented by the SHTA in its explanation in a letter to the ombudsman."

Furthermore, the SHTA feels that the additional expense for the entire chain, not just businesses but the inspectorate and receiver as well, could have been avoided by NOT implementing a tax change in the middle of a month. The additional work for the tax inspectorate and businesses is not just poor planning but wasteful of the limited resources.

The SHTA is hereby requesting that the corrections be made and published on Government’s official website and is calling on the Ministry of Finance/ Inspectorate of Taxes to organize or facilitate the organization of an informative session for the business community to clear up the confusion regarding the TOT adjustment.