WILLEMSTAD – Significant steps have been taken to reform Curaçao's tax system since the launch of the Curaçao National Package, but many projects are still in the preparatory stages, with concrete results yet to materialize. This is evident from an analysis of the Implementation Report for the Curaçao National Package. The challenges are substantial: the tax system needs to be simplified, compliance must improve, and tax avoidance and evasion must be addressed.
The national packages were introduced as part of an agreement between the Netherlands and the Caribbean countries within the Kingdom during the COVID-19 pandemic in 2020. Due to the pandemic's economic impact, the islands faced significant financial challenges and requested assistance from the Netherlands.
In exchange for financial support, reform measures were proposed to strengthen the economy, government, and public sector. These measures were consolidated into "national packages" and are being implemented under the supervision of the Temporary Work Organization (TWO), which monitors and supports progress.
A Fairer System
One of the main goals is to create a simpler and fairer tax system that is more feasible and enforceable. While a "Sweep Law" was passed in 2023 to address various legal and technical corrections, and some quick wins were implemented from a previous action plan, the overall reform plan remains largely in the conceptual phase. The final plans are not expected until the first quarter of 2025.
The Sweep Law in Curaçao is a omnibus law designed to make various legal and technical corrections to existing legislation. The term "sweep law" refers to the fact that it bundles multiple small adjustments into a single law, correcting ambiguities, errors, or inconsistencies in previously adopted regulations. This allows for efficient changes in tax legislation without requiring separate procedures for each individual adjustment.
Calculating the Impact
The government is also working on developing macroeconomic models to better calculate the impact of tax changes. However, no concrete activities have yet started in this area. The necessary expertise and capacity within the Tax Department still need to be built up.
On international compliance, progress has been made. A task force for International Compliance has been established, and the tax agreement between the Netherlands and Curaçao has been approved by both parliaments. This brings Curaçao closer to meeting European and OECD standards. Full implementation of these standards is scheduled for 2025.
Improving the Tax Department
In addition, work is underway to improve the Tax Department itself. The first phase of a reform plan for the department has been implemented, focusing primarily on designing and formalizing a new organizational structure. However, the department continues to face issues such as understaffing and outdated processes, which are causing delays in further implementation. The implementation of the reform plan for the Tax Collector is on schedule but is expected to be completed by the third quarter of 2025.
The modernization of Customs is also delayed. While an initial assessment has been completed, further steps are behind schedule. The Customs service is not expected to be fully modernized until the end of 2026.
Delayed Progress
Despite the initiation of tax reform projects, actual implementation remains behind. The lack of capacity, expertise, and the complexity of the reform process have led to delays. While significant plans have been made on paper, the real-world execution of these tax system reforms will take more time.