WILLEMSTAD - According to a report on Tax Service Reform, optimizing Curaçao's Tax Service is not an easy task. The service is still grappling with significant challenges, and it is evident that much needs to be done, and the path, no matter which route is taken, is a lengthy one.
The amount of delay is an indication that there is no quick fix solution that will solve the problems in one go. The Tax Service Reform Plan indicates that Curaçao's Tax Service does not have a high score compared to international best practices and that there are many issues to address in the coming years.
"As there is already an ongoing improvement process at the moment, and we do not want to interrupt this, but rather enhance it as much as possible, the investigations provide the following advice. The first line of action is for the short term. In this line, it means that we need to practically examine how we can eliminate the delays, work smarter, adapt the system, establish connections between systems, and focus more on results. The focus of this line should be on avoiding duplicated work, eliminating ad-hoc tasks, and reducing unnecessary visits to the office."
Furthermore, this approach is also suitable for supporting the second line (for the long term). This line can only be successful if it addresses the most significant problems and delays. "This second line should focus on the development of the Tax Service and, to a greater extent, on sustaining modern facilities (such as sustained IT and an integrated modern IT system), well-trained and prepared qualified personnel for their tasks. This line also calls for more modern management (with fewer layers) and greater staff flexibility, compared to the current situation or experience."
The team of investigators who formulated the Reform Plan last April used the Tax Administration Diagnostic Assessment Tool (TADAT) from the IMF to gain insight into the current situation of the Tax Administration. The TADAT framework is based on nine Performance Outcome Areas (POAs). The evaluation report follows these nine POAs, assessing the maturity of these processes based on 32 indicators, indicating whether the Tax Service adheres to international best practices or not, on a scale from A to D.
An A rating signifies that the Tax Service complies with international best practices. A B rating indicates good performance, but it has not yet reached the international standard of good management. A C rating indicates weak performance compared to international best management practices. A D rating indicates insufficient performance and is given when necessary information is lacking for an effective evaluation.
For POA 1, which deals with "Registration and integrity of the taxpayer's file," the score is D twice. "The Tax Department did not provide structure to initiatives or formal processes." For POA 2, which addresses "Effective risk management," the score is D five times. "It was found that there is neither a formal nor informal integrated risk management approach in the control of Tax Department." For POA 3, which deals with "Efforts towards voluntary compliance," the score is D four times. "Tax Department does not have a central department responsible for providing assistance to taxpayers. There is inspection staff providing information to walk-in visitors. The same applies to the Receiver's office. The customer service counter is not integrated. In the inspection department, the focus is still more on material aspects. There is no Tax Department call center." As everyone knows by now.
For POA 4, which deals with "Timely filing of returns," the scores are C, D, and A. "The mandatory digital filing is a strong point. Contamination of the Crib, or tax number (with respect to actual compliance rates) hinders the view on the current percentage of timely return filings. Taxpayers who are due a refund on the income tax are not encouraged. There is significant delay in imposing tax assessments (taxatieve aanslagen)." This "taxatieve aanslag" refers to a calculation by the Tax Inspector of the amount a person owes. This amount is often set higher to incentivize individuals to file their returns nonetheless.