Published On: Mon, Mar 18th, 2013

Not necessary to postpone sales tax differentiation

Curacao Government CenterWILLEMSTAD — The Social Economic Council (SER) has advised the government to link the introduction of the differentiation in the sales tax (ob-differentiation) to the mandatory introduction of cash register systems on January 1st 2014, but the government doesn’t think this is necessary.

This appears from the draft national regulation to amend the national regulation on sales tax that was forwarded to the Parliament. In its advice the SER wrote that at this moment not all entrepreneurs have a cash register system, which can print receipts that meet the requirements mentioned in the draft national regulation. According to the SER, it is important that customers can always check if the correct sales tax percentage was used.

The obligation for certain groups, such as retailers, companies in the catering industry and lottery salespeople, to use this cash register doesn’t become effective until January 1st 2014. According to the SER, only then will the cash register systems meet the requirements and an effective control by the consumers, the tax collector and the Institution Tax Accountants Bureau (Institution BAB) be possible. If the government still wishes to introduce the sales tax differentiation before January 1st 2014, the SER advises to make electronic cash register systems available to entrepreneurs at a larger scale than is now the case. If this cannot be done free of charge, the SER suggests effecting a tax or other arrangement.

The government is of the opinion that linking the sales tax differentiation to the introduction of the cash register systems is not necessary. “Although using a cash register system simplifies showing the correct data on a receipt, it is also relatively simply to meet the requirements manually. Data, which are specifically mentioned on a cash register system, such as the cash ID-number and a logo, are in that case of course not required. As regards this special point from the SER, the government will consider the possibility of a transitional arrangement for the receipt requirements for the period up to January 1st 2014.”

Information

The SER also believes an intensive information campaign is necessary to inform entrepreneurs and consumers on the changes, especially which products are exempted and which products have a higher sales tax. According to the SER, this could contribute to the role of customers in controlling the observance of the new national regulation.

Also the Advisory Council expects the ‘extra administrative burdens and control-technical objections’ will give problems. “The Council is of the opinion that, considering the complexity of the measures proposed, it’s unrealistic to expect everything will run smoothly from day one and that it will lead to budgetary setbacks if this expectation is not realized. The Council advises the government to consider possible starting up problems.” The government replied this regards non-recurring extra administrative burdens. “Moreover, most of the standard bookkeeping software packages and cash register systems can process the currently proposed administrative requirements.”

Million less

The introduction of a differentiation in the sales tax is one of the current government’s ways to increase the tax revenues. Currently, the sales tax is 6 percent. A zero tariff on certain bare essentials was suggested to spare the lower incomes. Nine percent sales tax will be levied on luxurious goods and services, and unhealthy products. The Ministry of Finance estimated earlier that in total, the measure is to yield 17.5 million guilders per year. However, the national regulation mentions 16.5 million guilders, because after protests from among others Fundashon pa Konsumidó, the government decided the higher sales tax would not apply for ‘computers and peripheral equipment, cosmetics and make-up’. “As a result the expected revenues will be approx. one million guilders less. This amount will be counterbalanced via expenditure control on the budget of the Country”, according to the explanatory memorandum with the enactment. It is unknown when the Parliament will discuss the draft national regulation.

Motor vehicles

In its advice the Advisory Council gave a negative opinion on the draft national regulation as regards introducing a 9-percent sales tax on motor vehicles. “The Council is of the opinion that considering the not well organized system of public transport, one cannot simply categorize motor vehicles as a ‘not necessary product’. The Council advises the government to review the possibility of levying the increased sales tax percentage only on the more expensive motor vehicles.” The government didn’t adopt this advice.

Source: Dutch Caribbean Business

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