Posted: 20 Oct. 2022

Digitization at the Tax Authorities

A win - win

The developments in the digital world have made many things easier in recent years, also in Curaçao. For example, one can order food at many 'truk'i' pan via the website, make online reservations at many restaurants and even ordering and paying online for drinks comfortably from the beach bed, is something that is not uncommon anymore at some beach clubs on the island. On the other hand, digitization at the Curaçao Tax Authorities  ̶  apart from the possibility to file a tax return via the online portal  ̶  has only made its appearance quite limited. This while the possibilities are omnipresent, e.g.  to improve the communication between the Tax Authorities and the taxpayer by means of digitization. The communication is often of great importance for the taxpayer, especially in the event that he has to deal with ex officio tax assessments imposed by the Inspector. On the basis of the problems concerning ex officio tax assessments in Curaçao, I demonstrate  in this opinion how a digital portal can lead to a win for both the Tax Authorities and the taxpayer.

Ex officio tax assessment

If (timely) submission of a tax return has not been made, the law gives the Inspector the right to issue an ex officio tax assessment. In this ex officio tax assessment, the Inspector makes an estimate of the tax to be paid, which is usually too high, so that the taxpayer is encouraged to still file a correct return. At the same time as the ex officio assessment, a default penalty is often imposed because the taxpayer would have failed to file a tax return. So much for the theory.

Problems in practice with the ex officio tax assessment

Yet, Curaçao's tax practice, on the other hand, is more unruly. For example, it often happens that taxpayers receive tax assessments ex officio, while the relevant returns have been made on time and have often also been paid. In addition to the fact that no authority  follows from the law to impose the ex officio assessment, the taxpayer is saddled with the burden of proving that the declaration and payment have already been made. For this, an objection letter, that meets specific legal requirements, must be submitted to the Inspector. In addition to this - and in order to prevent recovery measures - requests for deferral of payment need to be made to another body, i.e. the Recipient. This request for deferral of payment can therefore, paradoxically enough, be directed against a tax assessment for a period for which the tax has already been paid. In short, very time-consuming and annoying for the taxpayer, who has duly adhered to the rules. However, it can be even more complicated for the taxpayer in the event that an ex officio tax assessment is imposed, but it never reaches the taxpayer. Experience shows that (ex officio) tax assessments in Curaçao are sent by post but often do not reach the addressee. The consequence of this is that the unsuspecting taxpayer is under the assumption that no tax debts are outstanding – after all, a timely return has been made and paid – and certainly not that any fines have also been imposed. Often the taxpayer only takes note of the imposed ex officio tax assessments when a notice of coercion from the Recipient is delivered and it is actually too late to take action against the Tax Authorities.

Debtor overview

To prevent the above described problems, it is advisable as a taxpayer to request a debtor overview   ̶   an overview of the claims that the Tax Authorities have on a taxpayer  ̶  once in a while from the Tax Authorities. In this way, one is not suddenly faced with unpleasant surprises in the form of a notice of coercion where alleged tax debts are included that may have already been paid. Requesting a debtor overview can be done by e-mail or telephone and receiving this debtor overview usually takes some time. At the moment that tax assessments are wrongly included ex officio in the debtors' overview, an objection must be made to have these assessments nullified. However, the statutory term for an objection to the incorrectly imposed assessments will usually have expired by then.

Deadline for objecting

The objection period of two months after the date of the assessment notice will, if the tax assessment has never been received and only through the debtors' overview or the writ of coercion the taxpayer has become aware of the unjustified ex officio assessment, in many cases have already expired. Fortunately, it follows from a Dutch court ruling – which also applies in Curaçao  ̶ that if the formal objection period has expired already, an objection letter must be submitted against the tax assessment "as soon as reasonably possible". A maximum period of two weeks applies. Acting quickly is of great importance. After all, if an objection is not made within this two-week period, the legal remedies against the wrongly imposed assessment are in principle exhausted, the assessment is fixed and will have to be paid. The only possibility to have the tax assessment reduced after this is to request leniency from the Inspector against the now determined ex officio tax assessment by making a request for an ex officio reduction.

Solution

It is therefore important that the taxpayer can more easily gain insight into his tax position, including possible outstanding debts with the Tax Authorities. This can be done with a digital portal where the taxpayer can view the outstanding debts with the Tax Authorities or the debtor overview by means of a few mouse clicks.

A debtor overview can also provide clarity in the event that there is a right to a refund of tax. This is always first settled with other (future) outstanding tax debts. Currently, it is often unclear to the taxpayer with which assessment refunds have been settled. The debtor overview in the portal should also immediately clearly indicate whether there has been set-off with a previous refund.

In addition, it should also be possible to object to the ex officio tax assessment in the same portal and to request a deferral of payment. In this way, it is prevented that the taxpayer has to submit an extensive objection letter to the Tax Authorities and it is no longer necessary to request a  deferral of payment from the Recipient by means of a separate letter for the same assessment. The taxpayer then only has to briefly indicate in the portal that the return for the period has already been made and the resulting amount has been paid. This will also be a welcome improvement for the Tax Authorities, which still has a huge mountain of objection letters to assess – no less than 36,000 in May.

Ultimately, it will be desirable that tax assessments can also be imposed via the portal in Curaçao, with or without e-mail notification, such as mr. Karman argued earlier in this newspaper.

As an example, one could look at the portal of the Social Insurance Bank in St. Maarten, which already offers the possibility to view one's own tax position and to object in an accessible manner. With such a portal in Curaçao, the taxpayer can easily gain insight into his own tax position and take action more quickly against unjustly imposed tax assessments, but the Tax Authorities also save time by not manually providing debtor overviews and only needing to handle more compact objection letters. The digitization at the Tax Authorities will then not only facilitate and make the process of objecting easier for the taxpayer, but also facilitate the process of handling objections for the Tax Authorities themselves; an absolute win-win for both parties.

Meet our author

Tobias van het Nederend

Tobias van het Nederend

Consultant | BPS Tax Services & Advisory

Tobias is a tax advisor at Deloitte Dutch Caribbean