Overview of proposals for measures in tax BES legislation from 1-1-2020

News item | 01-01-2020 | 19:36

• Implementation of invoicing obligation general expenditure tax;
• Electrical cars 0% general expenditure tax rate;
• Alignment retention obligation for parties subject to administration;
• Interest compensation in case of late repayment by Belastingdienst Caribisch Nederland;
• Threshold amounts for return and payment of taxes Caribbean Netherlands;
• Availability annual accounts.

The measures are explained briefly below.

Implementation of invoicing obligation general expenditure tax

The measure regards the implementation of an invoicing obligation for everyone who, other than in employment, performs activities or services for third parties.

The levy of general expenditure tax (“algemene bestedingsbelasting” or “ABB”) on the domestic delivery of services is presently not subject to an invoicing obligation. When performing services the entrepreneur in the Caribbean Netherlands is not required to mention the tax on its invoice or receipt. The delivery of goods by an entrepreneur who cannot be qualified as a producer falls outside the scope of the levy.

The absence of the invoicing obligation results in restrictions for BCN in terms of the ability to conduct audits, in particular in respect of the income tax (“inkomstenbelasting”) and the general expenditure tax.

Electrical cars 0% general expenditure tax rate

The measure regards a change in the general expenditure tax in the Caribbean Netherlands, namely the tightening of the criteria for the 0% general expenditure tax rate for the ‘very economical cars’ category.

The general expenditure tax rate for passenger cars on Bonaire is 25% upon import. For ‘very economical cars’ with a CO₂ emission not exceeding 110 grams per kilometre (petrol) or 95 grams (diesel) a 0% general expenditure tax rate applies upon import. To determine whether a car is economical CO₂ thresholds were included in 2011 that were never adjusted in the law to the technological developments.

It is proposed to only apply the 0% rate to cars that do not emit CO₂. In practice this shall mostly occur for passenger cars that are exclusively driven electrically. The measure is requested by the implementation. In addition, the stimulation of the use of passenger cars that do not emit CO₂ is in line with the aim for greening in the Caribbean Netherlands.

Alignment retention obligation for parties subject to administration

The Belastingwet BES (BES Tax Act) includes, as a main rule, a retention obligation of seven years for parties subject to administration. By way of exception to this main rule, a retention obligation of at least ten years applies to income tax declarations (“loonbelastingverklaringen”). A period of ten years also applies pursuant to the Douane- en Accijnswet BES  (BES Customs and Excise Duties Act or “DABES”). In practice the said difference leads to obscurity. It is proposed to align these periods by also including a period of seven years for income tax declarations and for the DABES.  

Interest compensation in case of late repayment by Belastingdienst Caribisch Nederland

On account of chapter 8 of the Belastingwet BES the taxpayer must pay late payment interest in case of late payment, however interest compensation is not paid by Belastingdienst Caribisch Nederland in case of late payment. It is proposed to henceforth provide interest compensation if BCN pays too late.

Threshold amounts for return and payment of taxes Caribbean Netherlands

The Wet Inkomstenbelasting BES (BES Income Tax Act) regulates, inter alia, in what instances an assessment with a payable amount is established and in what instances settlement of withholding taxes (“voorheffingen”) takes place. It is proposed to apply the same scheme to situations where salary is taxed according to the table for special remunerations. Presently, a deviating scheme applies to salary taxed according to the table for special remunerations. It is proposed to have the said deviating scheme expire, to facilitate the implementation and to simplify the regulations.

Availability annual accounts

The measure implies that entities that are, in pursuance of the Belastingwet BES (BES Tax Act) deemed to be established in the Netherlands are also held to submit an authenticated copy of the annual accounts to the Inspector.

The insight into the annual accounts assists Belastingdienst Caribisch Nederland in performing audits. Although the relevant entities are not liable to pay profit tax (“winstbelasting”) in the Caribbean Netherlands, they do pay other taxes in the Caribbean Netherlands, e.g. general expenditure tax and (on behalf of the employees) payroll tax (“loonbelasting”). The data of the annual accounts therefore provide BCN relevant information during the enforcement of other taxes.

Real estate tax

The BES Tax Act contains the option of exempting certain institutions and organisations from paying real estate tax. These are charitable or cultural institutions, organisations with a public or social interest, and organisations of employers or employees (trade unions). This applies subject to the condition that these organisations must exclusively or virtually exclusively use the property (the building, specifically not a private residence) themselves. They may also not make a profit and not compete with organisations that do (attempt to) make a profit. This measure was introduced with retroactive effect from 1 January 2018. The institutions listed in the annexe to the act meet these conditions according to Belastingdienst Caribisch Nederland.

The legal text can be found in the BES Tax Act, Article 4.4, section i.

If you have any questions about this matter, or if you believe that your institution or organisation belongs on this list, please contact the Tax  Administration, real estate tax department.