Death & Taxes: Stop The Unlawful Inheritance Tax Collection

In the realm of taxation, few things are as certain as the inevitability of death and taxes. Yet, what happens when these two certainties collide in a legal quagmire? Aruba’s inheritance tax cases have led us down a winding path, culminating in a decisive judgment by the appellate court. However, the aftermath has left many scratching their heads as the tax authorities refuse to yield. Despite choosing not to appeal the case to the Supreme Court, they adamantly persist in their stance of collecting succession taxes beyond 2018. This perplexing decision raises concerns about the application of justice and good governance. In the following article, we explore this peculiar scenario and consider the reasons behind the tax authority’s refusal to go beyond the letter of the law in the pursuit of tax collection. Read my previous column here.

The Perplexing Persistence of Inheritance Tax Collection

Curiously, despite a resounding court ruling that dismantled the legal framework for inheritance tax as of July 1, 2018, Aruba’s tax authorities have continued their pursuit of inheritance tax collections. Data from the Central Bank of Aruba, corroborated by sources well-versed in income and taxation matters, reveals a startling revelation: the tax authorities have managed to amass a staggering sum, exceeding Afl. 2.4 million in inheritance tax collections since the tax was officially abolished. Yes, you read that correctly—this tax is being collected even after its official abolition.

This revelation is nothing short of astounding, considering the court’s unambiguous legal foundation categorically states that inheritance tax assessments post-July 1, 2018, lack validity without transitional legislation. Esteemed entities like Grant Thornton have shared this perspective. The relentless pursuit of these collections, against the backdrop of the court’s verdict, raises legal and ethical questions about the tax authorities’ actions.

The Implications of Unyielding Persistence

The continued insistence of Aruba’s tax authorities on collecting inheritance taxes post-July 1, 2018, in defiance of a clear and definitive court ruling, raises numerous concerns. First and foremost, this persistence challenges the very essence of the rule of law and the principle that all government institutions must respect and uphold legal decisions. It undermines the authority of the tax court, casts doubts on the credibility of the legal system, and raises questions about the government’s commitment to upholding the law.

Furthermore, the repercussions of these actions extend far beyond the specific court case at hand. Numerous heirs in Aruba may now face unwarranted tax liabilities, jeopardizing their financial stability and well-being. These are liabilities that individuals, unaware of the lack of legal grounds, may have been sacrificing their finances to fulfill. This situation creates an atmosphere of uncertainty and unpredictability, leaving citizens questioning whether the government will honor its legal determinations. Conversations with tax lawyers and advisors, including those from prominent firms, have revealed widespread dismay, with several civil lawyers contemplating taking the matter to civil court as a last resort. It may fall upon the civil court to issue an order halting this unlawful collection, potentially creating an unwanted liability for the government.

Government Intervention Required

The revocation of the succession tax, without accompanying transitional regulations, was a choice made by the government’s executive body. The parliament, representing the legislative body, repealed the succession tax ordinance and the relevant sections of other tax-related laws that referenced the succession tax ordinance. Without this legal foundation, the tax authority cannot issue any succession tax assessment or collect this tax. Insisting on doing so would be arbitrary and contrary to the rule of law. Why, you might ask? Because our Constitution, Article VII, makes it abundantly clear:

“Taxes shall be levied by virtue of a national ordinance.“

This article states that taxes in Aruba can only be levied based on a national ordinance. In other words, tax laws must be established by the legislative authority of Aruba before taxes can be imposed on the population. This is an essential principle of tax justice and transparency, ensuring that the authority to levy taxes is regulated by law and cannot be imposed arbitrarily without the proper legal basis. In this situation, we are witnessing precisely what our founding fathers, the architects of the Constitution, sought to prevent.

The Necessary Steps/the Job To be Done

Experts unanimously agree on the necessary steps to be taken: the tax authority should promptly issue a public statement no later than December 31st, 2023, declaring that all assessments issued post-July 1, 2018, were erroneous and are null and void. Subsequently, any succession tax payments made in good faith should be promptly reversed and refunded to or offset in favor of the taxpayer, with all relevant records being updated accordingly.  I believe belief that the government will fully support and adhere to the decisions of the Appellate Tax Court and endorse this necessary halt. The situation demands immediate government intervention to rectify this matter. The government’s responsible for ensuring that the rule of law prevails and that citizens are not burdened with undue financial liabilities. The Aruban authorities should take proactive measures to cease the collection of inheritance taxes post-2018 and offer relief to affected heirs.

Conclusion

In conclusion, the persistence of the tax authorities in collecting inheritance taxes in defiance of a clear court ruling threatens the integrity of the legal system and impacts the lives of countless heirs on the island. It is imperative that the government intervenes promptly to rectify this situation and ensure that justice and fairness prevail for the whole community. Perhaps then the memories of the deceased will be able to rest in peace.