Baker Tilly Dutch Caribbean | Edition 1 2014
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IN THIS ISSUE FOCUS ON TAX LAW<br />
TAXES<br />
<strong>2014</strong><br />
volume 02 | edition 01<br />
The digital information<br />
source from<br />
BAKER TILLY<br />
DUTCH CARIBBEAN
CONTENTS<br />
Foreword pag 4<br />
Appeal in Tax Matters pag 6<br />
Penalties in Tax Law pag 8<br />
The BT Network pag 10<br />
All dressed up for your Taxes pag 12<br />
In the Spotlight pag 14<br />
Voluntary Disclosure pag 16<br />
TIO/FIOD Investigation pag 17<br />
Are you prepared for a TIO or FIOD invasion? pag 18<br />
The firm or firms mentioned within this document are independent members of <strong>Baker</strong> <strong>Tilly</strong> International (unless otherwise expressly stated). <strong>Baker</strong> <strong>Tilly</strong> International Limited is an<br />
English Company. <strong>Baker</strong> <strong>Tilly</strong> International provides no professional services to clients. Each member firm is a separate and independent legal entity and each describes itself as<br />
such. Member firms are not <strong>Baker</strong> <strong>Tilly</strong> International’s agent and do not have authority to bind <strong>Baker</strong> <strong>Tilly</strong> International or act on <strong>Baker</strong> <strong>Tilly</strong> International’s behalf. None of <strong>Baker</strong> <strong>Tilly</strong><br />
International nor any of the independent member firms of <strong>Baker</strong> <strong>Tilly</strong> International has any liability for each other’s acts or omissions. In addition, neither <strong>Baker</strong> <strong>Tilly</strong> International nor<br />
any other member firm has a right to exercise management control over any other member firm. © <strong>2014</strong><br />
pag 2<br />
pag 3
A DISPUTE WITH THE TAX AUTHORITIES OR A TIO OR FIOD<br />
INVASION? BE PREPARED!<br />
A feeling of duality surrounds taxes. Taxpayers aim to enjoy<br />
as much tax advantages as possible, while the tax authorities<br />
are bound by law to collect tax guilders.<br />
FOREWORD<br />
This makes for interesting<br />
discussions and intriguing news<br />
stories with large multinationals<br />
trying to minimize their taxes and<br />
the authorities as shepherds of<br />
what’s ethical and what defies the<br />
boundaries of good citizenship.<br />
Such disputes may have fierce<br />
influence on the reputation of the<br />
concerned companies and their<br />
management.<br />
Are you prepared for a tax audit by<br />
the Tax Authorities or even worse,<br />
an investigation by the TIO or FIOD?<br />
How to start a tax proceeding or<br />
what to do when they appear on<br />
your doorsteps demanding to see<br />
your books immediately or want to<br />
seize your computers? And we don’t<br />
just mean having the books and<br />
supporting documents ready; do<br />
you know what to say, what to ask<br />
and what to avoid saying or doing?<br />
Be prepared!<br />
In this edition of our Personally<br />
Invested magazine, we aim to<br />
give insight in the relationships<br />
between you as taxpayer, whether<br />
as business owner or as private<br />
taxpayer and formal tax rules and<br />
regulations. The articles provide<br />
examples of dealings with the tax<br />
authorities; what can be expected?<br />
What are the do’s and don’ts.<br />
We also introduce our new partner,<br />
Arthur van Aalst, our specialized<br />
tax attorney.<br />
Arthur and his team are dedicated to<br />
assist in case of a BAB audit, FIOD<br />
or TIO investigation and other formal<br />
tax matters that require insightful<br />
knowledge of the tax jurisdiction and<br />
law. Feel free to contact Arthur for a<br />
copy of our latest instruction guide:<br />
“How to act during a TIO or FIOD<br />
investigation”.<br />
Enjoy reading!<br />
Victor Bergisch<br />
pag 4 pag 5
If the Tax Inspector rejects a notice of objection against a tax<br />
assessment, the taxpayer has the right and opportunity to file<br />
an appeal with the Court of Appeals in Tax Matters (hereafter<br />
the “Court”).<br />
APPEAL IN<br />
TAX MATTERS<br />
Argumentation and timing<br />
are essential<br />
Such an appeal has to be filed within<br />
two months after the date of the Tax<br />
Inspector’s ruling.<br />
After the Court has received the<br />
letter of appeal, it grants the<br />
Inspector the<br />
opportunity<br />
to invoke his<br />
right to react<br />
to the appeal<br />
in writing. The<br />
taxpayer may<br />
be represented by a third party,<br />
and a (tax) attorney is not explicitly<br />
required in a tax court.<br />
REPRESENTATION BY<br />
A TAX ADVISOR<br />
After the exchange of arguments<br />
in writing, the Court will set a date<br />
for a hearing. During this session<br />
in front of the tax judge(s) both<br />
parties get the opportunity to<br />
plead their cases and the judge(s)<br />
may ask questions. The taxpayer<br />
or his representative should be<br />
properly prepared to answer these<br />
questions. In addition, he or she<br />
should be prepared to receive and<br />
counter possible new arguments of<br />
the Inspector. Usually after several<br />
months, the Court will render its<br />
verdict. Wilco van Oosten, tax<br />
advisor,<br />
strongly<br />
Both parties get the<br />
opportunity to plead<br />
their cases<br />
advises<br />
to engage<br />
a tax<br />
specialist:<br />
“fiscal<br />
expertise and the experience to<br />
deal with these cases is essential,<br />
especially because at this moment<br />
there is no possibility to appeal a<br />
verdict of the Tax Court! As there<br />
is no further appeal option; it is<br />
extremely important that the letter<br />
of appeal contains all relevant facts,<br />
arguments and references and that<br />
all questions raised by the judges<br />
are answered fully and precisely.”<br />
pag 6 pag 7
PENALTIES IN<br />
TAX LAW<br />
Incorrect tax returns? You could<br />
face incarceration.<br />
Curaçao and St. Maarten’s Tax Legislations have a special<br />
chapter on penalties in case of violations of tax laws. If a<br />
taxpayer evades tax regulations, he risks punishment under<br />
either administrative (tax) law or criminal (tax) law.<br />
In case of criminal (tax) law, only<br />
a criminal Court may impose a<br />
penalty. This penalty may vary<br />
from a fine to imprisonment or a<br />
combination of the two. In general,<br />
criminal prosecution only takes<br />
place if the taxpayer deliberately<br />
and/or regularly did not file tax<br />
returns and/or evades paying large<br />
amounts of taxes.<br />
In most cases, a taxpayer<br />
is punished on the basis of<br />
administrative (tax) law.<br />
The fines under this law can be<br />
divided in ‘offence fines’ (in <strong>Dutch</strong><br />
“vergrijpboetes”) or ‘default fines’<br />
(in <strong>Dutch</strong> “verzuimboetes”). Certain<br />
officers of the Tax Authorities or<br />
judges of aTax Court may impose<br />
these fines.<br />
An offence fine will be imposed in<br />
case of more serious tax offences.<br />
This fine may run up to 100% of<br />
the tax not paid. The amount of a<br />
default fine depends on specific<br />
conditions such as the number of<br />
prior defaults.<br />
pag 8 pag 9
THE BT<br />
NETWORK<br />
PROUD SPONSOR CHALLENGE YOUR LIMITS<br />
Being Personally Invested put us<br />
right in de middle of the society we<br />
work and live in.<br />
<strong>Baker</strong> <strong>Tilly</strong> De Paus Vesseur is proud<br />
sponsor of ‘Challenge Your Limits’.<br />
Stefan Sluijter & John Ottevanger<br />
from Curacao opted to participate<br />
in the extremely challenging Absa<br />
Cape Epic!<br />
This 800 km off-road race organized<br />
in Cape Town, South Africa, is in the<br />
top 3 of the worlds most toughest<br />
endurance races.<br />
The avid cyclists realized that not<br />
every challenge in life is by choice,<br />
therefore they decided to use<br />
their cycling challenge to start the<br />
foundation Challenge Your Limits.<br />
Challenge Your Limits goal is to<br />
gather donations to benefit the<br />
Soeur Hedwig School on Curacao,<br />
helping them to buy sports materials<br />
and equipment for the disabled<br />
children. For more information, or to<br />
become a sponsor yourself, go to<br />
www.challengeyourlimits.org<br />
NETWORKING<br />
Are you doing business in multiple<br />
locations around the world or do<br />
you intend to do so? On a quarterly<br />
basis, <strong>Baker</strong> <strong>Tilly</strong> International issues<br />
a publication highlighting cross<br />
border tax developments that may<br />
BAKER TILLY’S WORLDWIDE REVENUE INCREASED IN 2013<br />
Combined global revenues of our<br />
member firms for the year ended<br />
30 June 2013 were up 3% to<br />
US$3.4bn. Our lower percentage<br />
growth rate in recent years reflects<br />
the ongoing difficult economic<br />
markets in some parts of the world<br />
following the global financial crisis.<br />
<strong>Baker</strong> <strong>Tilly</strong> International has a<br />
presence in almost every corner of<br />
the world.<br />
interest you. In this issue you travel<br />
around the world… not in 80 days,<br />
but in 9 pages.<br />
• 137 countries<br />
• 738 offices<br />
• A global workforce<br />
of 27,000<br />
• Global combined revenues<br />
for 2013<br />
US$3.4BN, UP 3%<br />
GLOBAL RESEARCH IDENTIFIES THE EIGHT KEY<br />
PRINCIPLES OF SUCCESSION IN A BUSINESS.<br />
That is a title we have all been<br />
waiting for. Though our next<br />
Personally Invested magazine will<br />
give you more in-depth information<br />
about the succession business, this<br />
article provides a first glance at the<br />
eight basic principles of succession:<br />
Click for more info<br />
Click for more info<br />
Click for more info<br />
• Succession is not retirement<br />
• Start with readiness<br />
• Set your goals before the journey<br />
• Price is not first<br />
• Harmony is a must<br />
• Plan early, start earlier<br />
• Equality of not equal<br />
• Ask before you get lost<br />
pag 10 pag 11
Be it personal or in a professional (business) capacity;<br />
everyone has one experience or the other with Tax<br />
Authorities. Ingrid Futselaar interviewed Michael Wulfsen,<br />
owner of fashion boutique Wulfsen & Wulfsen and asked him<br />
how he ‘dresses’ for such an occasion.<br />
ALL DRESSED<br />
UP FOR YOUR<br />
TAXES<br />
Experience of<br />
a BAB audit<br />
“Communication is key”, says<br />
Wulfsen. “Every entrepreneur really<br />
just wants to focus on his business<br />
and doesn’t want to spend too much<br />
time on taxes. In my experience,<br />
it is important to build a respectful<br />
relationship with the officials of the<br />
Tax Authority. This is not always<br />
easy, but cooperation and open<br />
communication are absolutely<br />
essential.”<br />
Last year Wulfsen & Wulfsen<br />
Curaçao was audited by the<br />
Belasting Accountants Bureau (BAB,<br />
the National Tax Audit Agency).<br />
Michael Wulfsen explains: “Initially,<br />
the communication with the BAB<br />
team was very open. They explained<br />
clearly how the audit would take<br />
place, which years and taxes<br />
they would audit and the intended<br />
timeframe of the audit. However,<br />
the whole process turned out to be<br />
rather time-consuming and they did<br />
not stick to all the agreements. In<br />
addition, the open communication<br />
we enjoyed at the beginning of<br />
the audit, unfortunately ended in a<br />
one-way flow. Though we had very<br />
valid arguments, none of these<br />
arguments or other remarks were<br />
mentioned in the BAB report.”<br />
Wulfsen continued to comment<br />
that: “in the Netherlands, the Tax<br />
Authority used the slogan ‘Leuker<br />
kunnen we het niet maken, wel<br />
makkelijker’ (We can’t make it more<br />
pleasant, but we can sure make it<br />
easier). In Curaçao, I sometimes<br />
get the feeling that they make the<br />
execution of tax audits more difficult<br />
than necessary, whereas Curaçao<br />
tax legislation is far less complex<br />
than in the Netherlands or Aruba,<br />
for instance. Digitalizing the process<br />
(online) would already make a world<br />
of difference and could make all of<br />
our lives a lot easier.<br />
Not just for the tax returns but<br />
also for tax audits and overviews<br />
of historical summaries and<br />
outstanding amounts.<br />
It’ll save both the entrepreneurs and<br />
the Tax Authorities time.”<br />
pag 12 pag 13
IN THE<br />
SPOTLIGHT<br />
Profiles to take note of<br />
Arthur van Aalst<br />
ARTHUR VAN AALST<br />
Partner at <strong>Baker</strong> <strong>Tilly</strong> <strong>Dutch</strong> <strong>Caribbean</strong>. Arthur is a tax attorney, aiding and<br />
advising his clients, both inside and outside the courtroom. Arthur brings<br />
valuable knowledge and experience to the table when it comes to fiscal audits<br />
and dealing with more in-depth and fierce investigations by TIO or FIOD.<br />
Over the years he has been very successful in helping clients in various<br />
difficult circumstances.<br />
Shanda Halley<br />
SHANDA HALLEY<br />
Leads our practice in St Maarten. As a certified auditor, she knows audit<br />
and has ample knowledge of financial issues, compilation and payroll<br />
matters. Besides these traits she has good knowledge of fiscal matters,<br />
in order to identify issues and accurately assess the assistance that you<br />
will need. Shanda has experience in a variety of industries and is a true<br />
business partner.<br />
Caroline da Silva<br />
CAROLINE DA SILVA AND FREENEY FELICIA<br />
In January of this year Freeney Felicia and Caroline da Silva finalized their<br />
Registered Accountants (RA) study, which is a valuable addition to our highly<br />
qualified workforce. Eric Vesseur explains: “we invest in the professional<br />
growth of high potentials like Caroline and Freeney to further improve our<br />
service and the quality of our deliverables”.<br />
Freeney Felicia<br />
pag 14 pag 15
VOLUNTARY<br />
DISCLOSURE<br />
What if a taxpayer forgot to<br />
report or incorrectly<br />
reported taxable income in<br />
their personal income or<br />
profit tax return(s)?<br />
Fortunately, the taxpayer may<br />
request a so-called voluntary<br />
disclosure (in <strong>Dutch</strong> “vrijwillige<br />
verbetering” or “fiscale inkeer”) and<br />
still submit the correct and complete<br />
information to the Tax Authorities at<br />
a later point in time.<br />
A voluntary disclosure is only<br />
possible as long as the taxpayer<br />
was not aware or reasonably could<br />
not have been aware that officials of<br />
the Tax Authorities were familiar with<br />
or about to become familiar with<br />
the incorrectness of the filed tax<br />
return. Hence, the rectification must<br />
take place on a voluntary basis and<br />
only before the tax authorities raise<br />
questions or announce a tax audit.<br />
The benefit of a voluntary disclosure<br />
for the taxpayer is that the taxpayer<br />
does not have to pay an offence<br />
fine (in <strong>Dutch</strong> “vergrijpboete”) of<br />
up to 100% but only a default fine<br />
(in <strong>Dutch</strong> “verzuimboete”) with a<br />
maximum of 15%. In Aruba there<br />
will also be no offence fine, but<br />
there is no maximum to the default<br />
fine that can be imposed. Arthur<br />
van Aalst: “Make sure that your<br />
tax lawyer arranges that there will<br />
be no prosecution on the basis of<br />
a criminal provision as a result of<br />
the voluntary disclosure. Pursuant<br />
to tax regulations, a voluntary<br />
disclosure avoids an offence fine or<br />
criminal tax penalties but it does not<br />
automatically avoid prosecution on<br />
the basis of criminal provisions”.<br />
TIO / FIOD<br />
INVESTIGATION?<br />
Have your tax attorney at your side!<br />
Most taxpayers only deal<br />
with Tax Inspectors or<br />
the BAB.<br />
In case these officials of the Tax<br />
Authorities suspect that a taxpayer<br />
deliberately or regularly evades tax<br />
laws, they may contact an officer<br />
of a tax investigation bureau. For<br />
Curaçao and St. Maarten this is<br />
the TIO (“Team Inlichtingen en<br />
Opsporing”) and for the BES Islands<br />
it is the FIOD (“Fiscale Inlichtingen<br />
en Opsporingsdienst”). These tax<br />
investigation bureaus will come into<br />
action if a taxpayer is suspected of<br />
a criminal tax offense. Arthur van<br />
Aalst: “If an investigation officer<br />
informs a taxpayer that he is<br />
considered a suspect, don’t make<br />
any further statements and contact<br />
your tax attorney immediately.” The<br />
investigative methods and tools<br />
used by the TIO or FIOD are totally<br />
different from investigations by the<br />
Tax Authorities (e.g. the BAB),<br />
as are the rights of a taxpayer and<br />
the penalization. For instance,<br />
a Government Tax Inspector is not<br />
permitted to make use of invasive<br />
methods such as wiretaps,<br />
house searches or observations<br />
of suspects.<br />
And where the taxpayer generally<br />
makes use of a tax advisor, he now<br />
needs a tax attorney to represent<br />
him during the hearings by the<br />
TIO or FIOD officials or during the<br />
sessions before a criminal Court.<br />
pag 16 pag 17
ARE YOU PREPARED<br />
FOR A TIO OR FIOD<br />
INVASION?<br />
The TIO or FIOD can appear at your doorstep unannounced,<br />
demanding to see your books immediately. When they do,<br />
are you properly prepared?<br />
And we don’t just mean having the<br />
books and supporting documents<br />
ready; do you know what to say,<br />
what to ask and what to avoid<br />
saying or doing?<br />
<strong>Baker</strong> <strong>Tilly</strong> <strong>Dutch</strong> <strong>Caribbean</strong> and<br />
HBN Law recently joined forces<br />
to give a presentation and<br />
crash course in ‘Handling a<br />
TIO or FIOD Invasion’.<br />
<strong>Baker</strong> <strong>Tilly</strong> <strong>Dutch</strong> <strong>Caribbean</strong> and<br />
HBN Law chose to do this together,<br />
because the fields of expertise they<br />
each bring to the table complement<br />
each other, making the training<br />
they gave to employees of financial<br />
institutions all the more successful.<br />
<strong>Baker</strong> <strong>Tilly</strong> <strong>Dutch</strong> <strong>Caribbean</strong> Partner<br />
Arthur van Aalst is a specialized<br />
Tax Attorney, while attorney Jeroen<br />
Eichhorn of HBN Law has in-depth<br />
knowledge of Civil Law.<br />
Tax Attorney Arthur van Aalst: “When<br />
seven TIO or FIOD investigators<br />
suddenly show up at your doorstep,<br />
the first person they see is the<br />
receptionist. This receptionist must<br />
display a strong footing and be able<br />
to quickly switch to asking the right<br />
questions, redirect the investigators’<br />
questions and diligently inform<br />
superiors of the situation at<br />
hand.” During the presentation,<br />
Jeroen Eichhorn of HBN Law and<br />
<strong>Baker</strong> <strong>Tilly</strong>’s Van Aalst provided<br />
receptionists, assistants and<br />
managers of several local financial<br />
institutions with clear instructions<br />
on how to handle an unexpected<br />
tax invasion.<br />
Financial institutions such as<br />
banks and trust companies are<br />
often dependent on the input of<br />
their clients. If these clients of<br />
the financial institution in question<br />
generate ‘black market’ revenue and<br />
keep a shadow administration that<br />
the institution does not know about,<br />
the institution may involuntarily<br />
be called as a witness, or even<br />
worse, also become a suspect in<br />
a criminal investigation. Eichhorn:<br />
“When subsequently a tax invasion<br />
by an investigation authority follows,<br />
you had better be prepared.”<br />
Common financial crimes include<br />
fraud, forgery, and participation in a<br />
criminal organization or intentional<br />
false tax returns. In addition to heavy<br />
fines, these offenses can result in<br />
several years of incarceration.<br />
Although all of the attendees of<br />
the seminar were aware of the<br />
possibility of a tax invasion, many<br />
didn’t consider the situation in which<br />
they could be involuntarily involved<br />
in a criminal investigation into a<br />
third party, such as a client or a<br />
stakeholder. Besides this valuable<br />
awareness, the attendees also<br />
appreciated the tips and tricks<br />
for handling the moment when<br />
the investigators are already at<br />
the doorstep. <strong>Baker</strong> <strong>Tilly</strong> <strong>Dutch</strong><br />
<strong>Caribbean</strong> and HBN Law are<br />
satisfied with the turnout and glad<br />
that they were able to be help some<br />
of their clients, but also the financial<br />
sector in general to be better<br />
prepared.<br />
“It’s better to be safe than sorry, and<br />
in the end we all benefit from a clean<br />
and ethical economy”, according to<br />
Arthur van Aalst.<br />
pag 18 pag 19
THE BEST TO BE<br />
T EAMING UP WITH…<br />
Need more power to turn ambition into reality? Trust us, we<br />
understand. We believe in collaboration and getting up close and<br />
personal when it comes to your ambitions. Because it is in our DNA<br />
to be personally invested in our clients. It’s mutually beneficial:<br />
our experts get to do what they love best and your organization<br />
is strengthened with solid financial and tax advice and auditing<br />
services. Make a mental note:<br />
build strength with <strong>Baker</strong> <strong>Tilly</strong> St. Maarten!<br />
T +1721 542 0448<br />
www.bakertillysxm.com<br />
BAKER TILLY<br />
ST. MAARTEN<br />
Personally invested<br />
pag 20