Krebbers tells tenants ToT increase to be added to rent

Lack of clarity surrounding exemption�

PHILIPSBURG--Krebbers Associates, on behalf of its clients, has informed its clients' tenants, including those in apartment buildings, that it will be passing on to all tenants the increase of turnover tax (ToT) from three to five per cent.

The letter to tenants states in part: "As of January 1, 2011, we at Krebbers Associates will be charging this government ToT of five per cent to all tenants/rentals. If there is a change in implementation date by government, this will be automatically adjusted."

The notification prompted one resident to submit the Krebbers letter to The Daily Herald with inquiries about its legality. During the Parliamentary debate on the budget for 2011, Minister of Finance Hiro Shigemoto outlined the exemptions with regard to housing and the ToT.

According to the law, "persons and corporate entities that provide permanent housing for residents of St. Maarten are tax exempt." The Minister confirmed that exemption on Monday and reiterated that the ToT could not be passed on to a legal resident of St. Maarten in permanent housing. The Minister also requested and was provided with a copy of the Krebbers letter.

With ToT being a business tax, if a firm like Krebbers does not own an apartment or a home, for example, and does business on behalf of a third party, thereby acting as a real estate firm, the tax cannot be passed on to the legally residing tenant renting the apartment or home.

Krebbers, in such a scenario, would have a business relationship with the owner of the apartment or home and said owner would have to pay Krebbers a so-called service fee. The owner, under the law, is exempt from ToT and therefore cannot attempt to levy this on the tenant via a firm such as Krebbers, which, it is understood, cannot pass this on to the tenant either.

In an invited comment, Sabine Lans of Krebbers Associates, who signed the letter, said she was not aware of the exemptions outlined in the law and added that she would look into it.

One financial expert, who preferred to remain anonymous, told The Daily Herald that lengthy discussions had ensued when the housing exemption of the legislation was being drafted by government's Fiscal Affairs Department. He said that because the legislation was rife with contradictions, in his opinion the housing exemptions were still not clear.

Source: http://www.thedailyherald.com/islands/1-islands-news/12030-krebbers-tells-tenants-tot-increase-to-be-added-to-rent.html

Biology Facebook Caribbean JLS US supreme court Adventure travel