Risk Auditor Jandroep explains Finance and Acquisitions inconsistency In SXM. | SMN NEWS

The Risk Auditor discovered a very recurring inconsistency regarding Finance and acquisitions of capital properties in Sint Maarten. The problem relies on mortgages provided to NV/BV companies; however, the property purchased becomes personally owned. This practice has been occurring unnoticed, and the result in the Tax environment can be devastating.
Describing the case
The Bank loans a company an amount over which interest is calculated, which is 100% realistically and legally the burden of the company NV or BV; however, the property may not be registered in the books of the NV. if the deed does not indicate the NV/BV as the title holder. This scenario demonstrates that the NV is committed to paying for a property for 20 or 30 years over which no ownership rights can be exercised. In this case, all payments to the bank must be registered as loans to the property holder for the payback condition.
If the property holder is a liability in the company NV/BV, an explanation can be given to pay off the liability; however, the liability validation of the property holder will come into question. How did he obtain the finance funds? Another aspect is that if the property holder becomes a receivable, there must be Shareholder meeting minutes to support the funds released to the property holder.
Taxation impact
The Tax Department, in such a case, can consider the amount paid in the monthly installment as salary and or Profit share distribution over which taxes are due.
In addition, this situation causes the company to be not entitled to any investment incentives and may not depreciate the asset. If the accountant in the exercise overlooked the condition, all the results of the financial statements would be retroactively misrepresented and would trigger penalties in the profit tax environment. In addition, interest charges for the loan cannot be declared in the income tax atmosphere.
This problem must be solved by Tax specialists due to the nature of the number of financial inconveniences and legal entanglements that are currently in blind corners.

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