WILLEMSTAD — The government of Curaçao is preparing to replace its current sales tax system with a Value-Added Tax (VAT) regime, a landmark shift in the island’s economic policy aimed at strengthening revenue collection and aligning with international tax standards.
The proposal, currently under active evaluation, would position Curaçao alongside 175 countries worldwide that have already adopted a VAT system. The transition is part of a broader effort to modernize the tax structure, improve compliance, and reduce inefficiencies tied to the current multi-tier sales tax rates of 6%, 7%, and previously 9%.
In a public interview on May 7, 2025, Minister of Finance Javier Silvania emphasized the long-term benefits of the VAT reform. “VAT will help reduce the distortions caused by the current system and enhance our ability to collect revenue efficiently,” he stated. He acknowledged, however, that consumption taxes can disproportionately impact low-income households. To address this, the government is considering monthly compensation payments for minimum wage earners and other vulnerable groups.
VAT as Cornerstone of Economic Reform
The introduction of VAT is not just a tax change—it is being positioned as a cornerstone of broader institutional and economic reform. According to the Ministry of Finance, the transition is backed by increasing political support and international cooperation. Stakeholder consultations and technical studies are currently underway as the government finalizes its implementation timeline.
This initiative also aligns closely with the International Monetary Fund’s (IMF) recommendations, first outlined in its 2022 Article IV report, which urged Curaçao to adopt a VAT system and eliminate provisions that allow for import tax reductions on goods already subject to sales tax. The IMF argued that VAT would reduce inefficiencies and better support long-term economic growth.
IMF Support and Broader Reforms
The VAT transition is being supported by the IMF through technical assistance as part of Curaçao’s preparation for its 2025 Article IV review. This assistance extends beyond taxation and includes reforms in public finance, healthcare, and pension systems. According to Minister Silvania, the collaboration with the IMF sends a strong message to international investors and the local population about the island’s commitment to responsible governance and fiscal sustainability.
“This collaboration is an important step in ensuring long-term economic stability,” Silvania said during a working visit to Washington, D.C. “It reflects our commitment to responsible governance and transparent fiscal management.”
The IMF’s support will also focus on improving debt sustainability, enhancing the efficiency of public investment, and upgrading tax administration infrastructure—measures considered essential for the successful rollout of VAT. Lessons from neighboring jurisdictions such as Sint Maarten show that coordinated reforms and IT system upgrades are key to minimizing revenue leakage and ensuring compliance.
Next Steps
Though no exact date has been set, the momentum behind the VAT reform indicates that implementation could move forward soon. In the coming months, the government is expected to continue its public outreach, engage with the business community, and refine the technical design of the VAT framework.
For Curaçao, the adoption of VAT could mark a turning point—both as a practical tax measure and as a symbol of the island’s ongoing commitment to economic resilience and modernization.
