Currently there is much discussion on the cost of Petroleum Products, whereby the public has indicated that government is over-charging by including turnover tax (TOT) in the price build-up. The TOT is an indirect tax, a gross receipt tax with the character of a consumption tax, which is levied on sales of goods and services at every stage in the supply chain as it makes its way to the final end user and is aimed to tax the consumption of goods and/or the use of services (See the Explanatory note by the introduction of the Ordinance on Turn over Tax 1997, P.B. 1996, no. 210, Statenstuk, zitting 1996-1997, no. 3, Memorie van Toelichting: “De BBO is een indirecte belasting, een omzetbelasting met het karakter van een verbruiksbelasting die de “voortstuwing” van goederen èn diensten op hun weg van producent naar consument belast en die beoogt het consumptieve verbruik van goederen en diensten in de heffing te betrekken”). The TOT is very similar to a sales tax; whereas a conventional sales tax allows the seller to itemize the tax separately from the price of goods or services, the TOT requires it to be included in the price (tax-inclusive). As such, it is allowed to charge TOT at every step in the supply chain, from the wholesaler, to the retailer, to the end consumer.
The TOT is calculated over the turnover the entrepreneur has realized. Referencing the example given: if a company sells a product for 1 guilder to a consumer (thus the consumer pays the 1 Guilder) the entrepreneur is required to pay a 5 percent turnover tax over his gross receipt of 1 Guilder to the government. Therefore if the entrepreneur sells a product for 1 Guilder, than in this 1 Guilder should also reflect the TOT, which is included in the price-buildup.
In response to the current discussion regarding to the cost of Petroleum Products, the Ministry of Tourism, Economic Affairs, Transportation and Telecommunication (TEZVT) decided to show the thorough and complete breakdown of all the components that determine the end consumer price of Petroleum Products, which also includes the TOT in the price-buildup. This approach was taken in order to be transparent and to help the public understand the pricing structure.
In conclusion, it should be noted that the calculation and the pricing of Petroleum Products by the Ministry of TEZVT is correct. Questions may be referred to the Minister and inquiries directed to EVT.Inquiries@sintmaartengov.org.
