The draft bill “State Ordinance to amend the State Ordinance Tax on Operating Revenues” has recently been sent to parliament. This bill should enter into force as of January 1, 2010. The Minister of Finance already announced that a resolution (favorable policy) would be issued in case said date would not be possible. This resolution would contain the same measures as the bill.  The normal BBO tax rate will be lowered from 3% to 1.5%. This counts for the supply of goods as well as the rendering of services. The special BBO tax rate for export will not be changed. This rate stays on 1%.  The bill does not contain legislation regarding transitional situations. For example, questions could be raised what the outcome would be if the supply of a good takes place in 2009, while the payment has been made in 2010 (or vice versa). In this respect it is also of importance whether the entrepreneur has elected for the invoice system or that the entrepreneur is using the cash system. These topics are beyond the scope of this newsletter. Vendors of luxury goods may realize an incidental tax saving by postponement of the supply of the good till January 1, 2010. Irefer, for example, to car sellers, electronics stores, jewelers and furniture stores.

Example:

Garage X sells and delivers a car for Afl. 60.000 (including BBO) on 28 december 2009. The amount is paid on the same day by way of a cash payment. The BBO tax due amounts to Afl. 1.800 (3% of Afl. 60.000). If Garage X and the buyer would agree to postpone the sale and delivery till January 1, 2010, then the BBO tax due would amount to Afl. 900 (1.5% of Afl. 60.000). The tax saving would be Afl. 900. The seller and the buyer may agree as well how this tax saving would be divided between the two parties. 

The parliamentary documents are reflecting that the loss of BBO revenues will be compensated partly with the following measures in the 2010 year;

• Higher rate of excise duties on distilled beverages;

• Higher rate of excise duties on tobacco;

• Higher room tax rate.

No numbers have been provided yet regarding the increase of the aforementioned rates.

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