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Deferment of Payment and Prescription of a Tax Assessment

In an Aruban case the Supreme Court recently ruled that Article 13 of the National Ordinance of the Collection of Direct Taxes, as it applied until June 1, 2014, contains an exhaustive list of acts that suspended or interrupted the limitation period. Since the granting of a deferment of payment is not mentioned in that provision as a ground for interruption, such an act also has no interrupting effect.

This Aruban case revolved around the question of whether a tax assessment has expired. On March 30, 2007, the Aruban tax authorities imposed a final corporate income tax assessment on Aruba Bank for the year 2003. Aruba Bank objected to the assessment and requested a deferment of payment. The tax authorities granted (in any case) on February 12, 2011 a deferment of payment. The Aruban tax authorities subsequently sent a reminder on February 15, 2012 and a letter of execution was served on May 22, 2012. Aruba Bank then took the position that the tax assessment was time-barred. More than two years later, on June 24, 2014, the Aruban tax authorities threatened with a seizure under a warrant of execution. On the same day, Aruba Bank lodged an objection against the (looming) enforcement.

Another year later, on May 22, 2015, Aruba Bank initiated (civil) proceedings, seeking a declaratory ruling confirming that the 2003 tax assessment was time-barred. The Court of First Instance upheld the claim. The Joint Court of Justice (i.e. the Court of Appeal), on the other hand, rejected the claim. In short, the Court of Appeal considered that with the granting of a deferment of payment on February 12, 2011, the limitation period for the assessment was interrupted and the assessment was therefore not time-barred. The Court of Appeal considered that although Article 13 of the applicable National Ordinance does not explicitly state that the granting of deferments has an interruptive effect, the article may entail that, under certain circumstances, a requested and granted deferment has an interruptive effect. This ruling of the Court of Appeal is overturned by the Supreme Court.

According to the Supreme Court, the applicable Article 13 (old) of the National Ordinance of the Collection of Direct Taxes does not provide any grounds for believing that acts other than those referred to therein can also be assumed to have interruptive effect. In that regard, the Supreme Court considers it relevant that from the point of view of legal certainty it must be assumed that the list of acts of interruption, as mentioned in said provision, is of a restrictive nature. Since the granting of a deferment of payment is not mentioned in that provision as a ground for interruption, such an act also has no interrupting effect. Note that said provision was amended on June 1, 2014. As of that date, granting a deferment has been explicitly included as one of the interrupting acts of the limitation period.