PHILIPSBURG--Spifo NV, the corporation owning local jewellery store Goldfinger, continues to fight legal claims that it has been evading taxes. The Spifo NV legal team presented its defence during a court hearing on Thursday.
The case is scheduled for further handling on February 27. The postponement was requested to provide the prosecution time to prepare a reaction to Thursday's presentation.
The jewellery company with branches in Dutch St. Maarten and French St. Martin is believed to have reported its Front Street store's profits incorrectly or incompletely. Court documents indicate that this was done from January 1, 2002, to December 12, 2007. If found guilty, Spifo NV will be ordered to pay a fine of NAf. 500,000 for unpaid taxes.
A witness in the case said various scenarios were possible, one of which was that business cost of the French-side store had been marked on the Dutch-side store's books, making the profit margin smaller. This is believed to have been done because the tax rate in French St. Martin is 10 per cent, whereas in Dutch St. Maarten it is 34.5 per cent. Therefore a smaller profit would mean lower taxes.
Goldfinger's attorney said tax in French St. Martin was 33.3 per cent during the period in question.
On tax evasion and tax fraud in St. Maarten, the Crime Pattern Analysis (CBA) report says the island provides a favourable climate because of lack of fiscal monitoring. The CBA was created to help law enforcement agencies develop priority-based strategy for the prevention and repression of crime.
Controls have been lacking mainly because supervisory bodies and inspection services are beset by a lack of resources. Compliance by individuals and companies has been limited for many years and the tax system is so complex that it provides a great many loopholes.
The loss as a result of non-compliance or fraud may be significant, but it is impossible to establish this loss in the absence of the necessary data about individual citizens and companies from, for example, the Census Office, the Chamber of Commerce, the Immigration Department and the Land Registry Office. The data registered by many of these services is incomplete and inaccurate.
According to the CBA report, large-scale tax evasion has significant consequences. Prices remain artificially inflated, which distorts buying power and thus economic development.
Moreover, the investment climate is damaged and the budget deficit increases, which in turn impedes the development of the local and regional economy still further. Tax-related fraud thus has a severely disruptive effect on St. Maarten's economic development and ultimately erodes prosperity on the island.
A government that struggles with considerable budget deficits and is hampered by an unstable and outdated infrastructure that is urgently in need of reform in socio-economic and financial areas could benefit greatly from more income from taxes. This calls for investment in setting up an effective and sufficiently-equipped fiscal monitoring authority.
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