Official Response to "Tax Reform" Thread  Bottom

  • The following is an official response, from Finance Assistant Secretary Bruce Bilimon, to comments for the topic "Tax Reform" which discusses the recently endorsed recommendations for new tax structure:

    Yokwe Online Forum -->Current Events:…- July 7, 2010

    Lack of Enforcement --- Division of Customs, Treasury, Revenue and Taxation Kommol tata Pettittm, Bikinijack, Wanted and Lamaika for sharing your honest views on our enforcement efforts. Please provide our office with specific information of the non tax payers or how precisely we should improve our enforcement (collection) and if we don’t enforce and change despite knowing the specifics, then change is a must.

    Through collective efforts on the ground with our MISSA and MalGov counterparts, we have been able to identify businesses that are have been avoiding taxes, and we have send them notices and most of them to date, are complying.

    Candidly, we still have a dozens still not complying, and we are working with the Office of the Attorney General on these businesses since despite notices they still do not want to cooperate. For info, these are mainly small ones but still they must contribute and comply.

    For background, when we last conducted our business survey (back in 2008) **, the RMI Government pin pointed more than 200 businesses not paying. When we last check (2010) this figure, through reconciling our records, it has come down to roughly 50s and mostly small moms and pops --- I understand same issue with MISSA.

    **Source: Marshall Island…tes - 10/10/08

    For those certain exclusive businesses not paying their due and fair share to our Government, I ask my colleague (wanted) to please (please) provide more insight, and you have our assurance that we will do the job! From experience and understanding, it is very difficult to have 100% tax payer’s compliance and I wonder which country has achieved 100% full compliance. Just so you know and to show that all things are possible in spite of what is known, the vision of this office is to “to achieve 100% compliance with relevant RMI laws, rules and regulation, and to develop our Office into a professional, respected and honest entity.

    If our interpretation of not going to Court the measurement of enforcement, then I admit we have yet to refer cases but do we need to when we are settling matters internally? Again, our approach has been to first settle and enforce internally as mandated by law --- section 125 subsection (1). I have attached a copy of that law for reference. Moreover, here are sample notices we issue for those we know do not pay taxes:

    1. Notice of Demand to File & Pay Tax
    2. Notice of Assessment & Pay Tax
    3. Notice of Demand To Pay Tax

    Relatedly, for the past couple years (since 2005), we have audited businesses which yielded to Government millions in revenues. For this fiscal year we are projecting to collect more or less ½ million from our audit activities. Please refer to article entitled and posted here:

    Source: Yokwe Online: A…e - 10/25/2009

    Navigating forward, all we are asking is for your support, encouragement, and sharing of knowledge so we improve constantly and find ways to make things better for our collection system and of course our country. If you know someone not contributing tax or the essentials on how to improve our enforcement and collection system, please tell us. That way, we are respecting the Marshallese saying “jiban dron bwe en jokin wot juon”. We are not perfect so we need your help. Better yet, your Government needs your contribution and expertise for enhancement --- time may not be on our side (given what may happen in 2023) and inaction is not an option. Our priority I believe should be helping one another constructively for the future of our country in sustaining itself.

    All in all, please know that we are doing all we can with our limited resources to enforce the law. Thus PLEASE share what you know and let’s help each other. With your help, I truly believe we can achieve the 100% compliance. I have provided my email below and by law --- detailed information will be kept strictly confidential.

    Re tax reform, let me just say that it is a beginning of another process so your concerns and input will be considered through the stages. The recommendations are the byproduct of the Tax Reform Commission for revenue and tax regime change as submitted to our Cabinet. If call/wish of the country to amend these recommendations, then I believe changes will follow suit. More important though is for us is to start at some point.

    Kautiej aoleb,

    Bruce Bilimon
    Assistant Secretary
    Customs, Treasury, Revenue and Taxation
    Ministry of Finance
    RMI Government

    Tel: (692) 625-5724/5725

    -->Current Law: Ch…r 1 - Taxation

    "Promoting more information disclosure by the public service, rather than secrecy which may allow corruption to be hidden" - from Nitijela UN Workshop Outcomes Statement, Feb. 17, 2011
  • what was the overall collection from 2007, 2008, 2009?

    "Sometimes you just can't argue with stupid!!!"

  • Quote
    Through collective efforts on the ground with our MISSA and MalGov counterparts, we have been able to identify businesses that are have been avoiding taxes, and we have send them notices and most of them to date, are complying.

    I think I read that MalGov does not pay their income taxes to MOF and still do not pay their social security so wat do you means by your collective effort with them?
  • From current RMI tax law:

    Quote§116. Tax on income from immovable property.
    (1) There shall be assessed, levied, collected and paid a tax of three percent (3%) per year
    on all gross income from immovable property leased
    , exclusive of buildings and other
    improvements on land, by the lessee of such property.
    (2) The tax imposed by subsection (1) of this Section shall be collected by the lessee by
    deducting and withholding the tax imposed on any lease as and when paid or credited to the lessor.
    Every lessee, required to deduct and withhold the tax imposed shall be liable for the payment and
    shall pay such tax to the Secretary of Finance on or before the last day of the month following the
    close of each quarter (on or before April 30, July 31, October 31 and January 31) by filing a full, true and correct return showing all payments made, payor and description and location of property. Failure to comply with this Section shall constitute an offense. [P.L. 1991-134, §2(4).]

    Source: http://www.yokw…/IncomeTax.pdf

    There does not appear to be any ongoing discussions regarding an increase to the tax rate on land lease income? Should this tax also be reviewed?

    edited by: pettittm, Jul 10, 2010 - 05:09 PM

    “I hope the signing of the LUA (Land Use Agreement) allows the Government of the Marshall Islands more time to focus on the biggest issues it faces – how to raise the level of education and health of the Marshallese people and how to create an economy that will be stable after direct US funding ends in 2023.”
    US Ambassador to the Marshall Islands Martha Campbell, as quoted by MI Journal, 13 May 2011, pg 4

  • I don't agree 100% with the tax reform plans. But this is the first attempt for a long time (or maybe ever) for RMI to move things forward on a number of fronts, so I say go with it, as long as the administration and enforcement side is also strengthened at the same time. That's the key.
  • ***

    edited by: Re-Action, Jul 17, 2010 - 01:17 PM

    "For every Actions, there is an Equal Re-Action"
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