July 1st is almost here, and with it, BBO collected at the gate, at border import.
Because it was an especially tough nut to swallow both Customs and the Tax department helped orchestrate a series of after-working-hours sessions to explain the difficult-to-understand, BBO at the border, method of charge and offset.
I was present one afternoon this week as Luenne Pieters, at the helm of the tax department, DIMP, and her team, in collaboration with Ricky Croes, the head of Customs, spelled out facts and informed an audience made up of owners, accountants and finance supervisors, in employ the members of the Aruba Hotel & Tourism Association.
The audience took it all in, quietly, it was not its job to protest or question, it was there to learn, so that companies comply.
The introduction of BBO at the gate, when importing goods to the island, was planned for June 1st, on a tight schedule. Then due to the rushed timetable, it was pushed back to July 1st, to allow the tax department and anyone who imports anything, to prepare.
GOA organized press conferences and seminars trying to tie the loose ends, so we all understand what is expected of us, as the legislation which was deemed carelessly considered and unrealistic as far as preparation time, was ratified in parliament and turned into law.
The above opinion is borrowed from the Council of Advice report, RVA, in charge of evaluating GOA’s legal/economic moves.
The business community here was always pro-reform, it hoped that the much talked about 2023 Tax Plan will pave the way towards a structural reform of the complicated Aruban tax legislation with positive steps taken towards a sustainable tax system, based on simplicity and a balanced distribution of the tax burden within society.
That was also the expressed hope of RVA, GOA’s Council of Advice.
It even said: “The Council believes that the current proposals will not achieve the intended simplicity and balanced distribution of the tax burden.”
But to no avail. GOA has been talking about a tax reform for almost three years, maybe more, in order to collect more money, not really to simplify things.
The business community was hoping that BBO will remain at 6% at the point it’s introduced at the gate, but alas, GOA decided to burden its citizens further, 7%, instead of cutting costs, and as it stands right now, this homegrown patchwork system, of BBO collected upon import, with partial offsets, raises more questions than it gives answers, and the officials tried to smooth the process with above ‘splanation sessions.
I was impressed by the elegant female staffers of the tax department carrying in more chairs for attendees, but underwhelmed by the “coffee station.”
Incidentally, I just saw a press release by the Chamber of Commerce stating that recently the appetite for one-man-company, eenmanszaak, a legal structure which allows entrepreneurs to operate, has greatly increase, and that locals are opening more and more of those mini businesses.
This structure allows them to avoid some taxation, due to the size of their business — they are supposed to be small, under a certain low level of income.
But Arubans have become serious entrepreneurs during and post pandemic and there is a substantial segment of our population importing goods and selling them on social media, under the eenmanszaak umbrella, and without an umbrella at all. They will now have to pay the tax, at border entry, where before they avoided it.
We hope the new system will not disrupt the economy, will be easy to implement and maximize compliance.
My economist friends say this system will generate another 50 million for GOA’s coffers, which is not enough to cover expenses, since GOA continues to spend, business as usual, without tightening the belt.
