This might have been covered already on the board, but my "search" did not come up with any results. Can anyone advise as to exactly what the "turn over tax" ($32.69 in our case) is with regards to a 2 week vehicle rental? It appears it is a 5% tax in addition to the Government tax. I was checking the rates posted on the car rental website and the full figure rate including CDW and tax does not seem to include this "turn over tax" fee. We paid this "turn over tax" last year and if I check my records for the trips prior to that, it is probably there, too. I was just curious as to exactly what the tax represents and why it would not be included in the posted "complete/full" rate figures. Just curious...not complaining! Thanks. Carole

It is the OB that is levied on everything but bread and hotel rooms. It is only a few years old and is a basic sales tax and VAT rolled into a fee that is levied all the way up from importer, distributor, wholesaler and retailer.

So, levied at each 'turn over' of a product from one level to the next: importer, distributor, wholesaler, retailer means imposed four times on one product, on increasing values??? Or only on the 'value added' ('markup'?) in that 'level'???

What rate, out of pure curiosity???

5% on whatever the purchaser paid at each level, not just the markup.

Thanks, Michael and Linda...not to sound totally ignorant, what is OB and VAT?? Carole

PS Where do the monies collected go? Any particular project or government expenses or education, etc?? cb

Carole,

VAT is a 'value added tax', a European invention, or at least, English. I gather it is levied each time a product changes hands until it reaches the consumer. The tax is levied against whatever 'value' that level added.

I think 'OB' is the acronym for the Dutch title of the tax Michael and Linda described.

Linda, we have the same system here, but here you pay and collect OB as long as it is in the tradechain.What you've paid you can reduce from the collected OB, till the product reached the final consumer. So starting of with manufacturers price + Value Added Tax in the tradechain is the final tax the consumer is going to pay. (6% on grocery and 19% on luxury stuff)

Glenn OB = Omzet Belasting (Turnover Tax)
Joost

VAT and similar taxes must be looked upon quite kindly by the large corporations and conglomerates. After all, they don't pay tax when different parts of the same company can be used as suppliers for one another. Small companies are penalized by the system, since products produced by smaller concerns will have multiple hand-overs from one firm to another between raw material and finished product.

In the U.S., at least, small businesses make up a large percentage of the economic engine, yet have very little influence on government. It's the large corporations who have the money to go buy influence in Washington. I expect the same happens in other parts of the world.

For an island economy struggling to find ways to stimulate growth, such compounding taxes sure seem like a step in the wrong direction.

I'll step off my soap box now...

Hi Daniel,

I live in Belgium and we have the same VAT system.

It doesn't make a difference whether you are a small or a large company. Any VAT registered company pays VAT on items/services it buys, but the amount of VAT paid is deducted from the VAT it receives when goods/services are sold. The difference is paid to the government in case the balance is positive. In case of a negative VAT saldo, the VAT is returned by the Tax office to the company. The latter most of the time means that the company is loosing money.

So, in effect only the final consumer pays VAT.

Hope this helps.

Peter

So what Bonaire has is not VAT based on the above description.

Bonaire wholesaler buys 10,00 Nafl pays 5% = ,50
Resells to middleman 12,00 pays 5% = ,60
Resells to another middleman 15,00 pays 5% = ,75
Finally sells to consumer 20,00 pays 5% = 1,00

The government gets 5% tax on the new price at each level regardless of the number of resellers involved.

The importer of a product can apply for an exemption if they are going to resell the products.

Linda
From what you say what you have is not VAT. You may, however, be no worse off. The rate of VAT here in the UK is 17.5% and in many European countries it is higher.

By the way, it is a European rather than a British invention. We had to adopt it on joining the European Community. The only good thing to say about it is that in most shops the price you see includes the tax. It drives me crazy when I go shopping when the tax is not included. Maybe if I was better at multiplying by 1.05 or whatever, I wouldn't mind!

Linda, so VAT (OB) in Bonaire is not deductible for companies? Hmm, strange system. Lucky it is only 5% and not 21% like in Belgium.

Linda
are you sure previous tax is not deductable? in my opinion the tax system down there can't differ from our's here? The basic seem's to be the same. I'm a bit ignorant about this
Joost

Wow....what did I start!!?? I guess there is no simple answer to my question. It has been explained very nicely, however, and I wish to thank everyone for their input. My head is still spinning trying to figure it all out, but it does not take much to do that when you throw mathematics in my direction...LOL. Thanks everyone. Carole
PS Should this Turn Over Tax be listed on rental vehicle sites that advertise a specific rate to "includes taxes"??? (it was not listed on the site, but was added to my itemized quote via email) Hmmmmm.

Many countries have a system where tourists can apply for a refund of the vat by providing certifed doucuments and receipts to the tax dept. I used to do that when travelling to the UK.

We own a business on Bonaire as well as pay income tax. In no case is the OB tax deductible. This tax started about 3 years ago.

Jake says it replaced an end-user tax. It also changed rates a view times starting at 2.5%. And what was taxable changed a lot. Now almost everything has the 5% tax except hotel rooms.

and bread has no tax

Not long ago we had a governor in New Jersey who decided to raise old taxes and create new taxes and he even taxed the toilet tissue....he was a one-term governor and the tax was eventually repealed. Do you think there will be a "run" on bread on Bonaire now that we all know it is not taxed...yet! LOL. Carole

As far as the OB goes, it is deductible to a company only in the sense as it is included in the purchases a company makes (e.g. if a box of paper is NAFl 100 plus 5% OB - total NAF 105, then the cost of the paper is actually NAF 105 on the books). Basically, it serves to increase costs significantly when non-importing small businesses (most of Bonaire's businesses) are involved. Direct importers can apply for an OB exemption on imports, as I think Linda mentioned already.

Dan - they did used to have it so that intra-company transfers didn't incur OB, but I think they recently dropped that exemption when a larger than expected deficit was expected in the Central Government's operating budget.

Jake

On a somewhat related note, the governors of the US states are making an effort to require internet merchants to charge sales tax on all purchases. There are presently in excess of 7500 different sales tax regulations in effect in various municipalities, with huge numbers of exceptions on what is taxed.

While the States would of course like to get this revenue (since they've been unable to get their own citizens to pay the use tax which covers the situation), the likely result will be to run smaller Internet-based merchants out of business. Today, I spend an hour a month figuring out the Sales and Use tax for my business. If I had to do that for all of the states that charge a sales tax, I'd need a full time employee to handle that task.

I have no problem with the concept of a requirement to charge sales tax. If I were required to charge only my local tax (i.e. charge everyone Massachusetts tax under Massachusetts laws and exceptions) that would be a lot better than asking me to handle 7500 different tax districts.