Tax controls on St. Maarten will not change with new system

POSTED: 06/30/11 11:52 AM

“No door to door and business to business controls.”

St. Maarten – Finance Minister Hiro Shigemoto has called door to door and business to business controls for taxes a “misconception of reality,” an unfeasible objective and “an illusion far gone.” The statement forms part of his reply to questions on how the government will enforce the new tax system that is currently being worked out. Government aims to implement the new system in 2013 – a year later than the January 1, 2012 that the government stated in the draft governing program submitted to Governor Eugene Holiday as part of the formation of the government.

“It is understandable that for a layman on the tax field domain, the word control could evoke the perception that everybody and everything should be controlled. A business to business and door to door control to ensure that everyone is registered and controlled and that based on that starting point of the tax authorities are receiving the taxes is a misconception of the reality and not a feasible objective – an illusion far gone,” the minister states.

More clearly he states, “The control on the compliance with the tax law will not differ from the way in which control of compliance takes place now.”

The current process is that people can have their tax return and related documents reviewed at the tax office. The conversation will then continue through letters. The tax office may also choose to conduct a field examination, widely known as an audit, for people required to maintain a tax administration. That list includes people operating a company or practicing a profession, people responsible for withholding taxes and contributions at the source and entities. The three types of field examinations are partial, flash and spot checks.

The minister also states that there are limitations to the controls that can be done based on capacity to implement – staff shortages – and the legal framework. He also reveals that going door to door and business to business would be a very expensive part of the “massive process of tax levying.”

“The so called 100 percent philosophy, as a consequence of which each taxpayer’s return and each item of said return could be examined, exists only in theory. Nowadays it is more common that the focus of the control is more laid on the selection process of tax returns to be examined, which returns could contain risky items that need to be corrected,” Shigemoto writes.

The minister also points out, “Other kinds of returns of a less risky nature and of taxpayers identified as taxpayers proven to willingly and accurately file their tax return and pay their taxes correctly in the course of time could be processed with less effort and more or less automatically. Furthermore, the category of tax payers whose withheld payroll tax is considered by law to be their final tax due to their income category can be processed automatically.”


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