WILLEMSTAD – The Curaçao Tax Inspectorate has suffered a significant setback in a dispute with a local car rental company after the Court of First Instance ruled that several tax assessments and penalties for 2019 must be annulled. The court found that the Tax Inspector could not prove that the assessments had been properly delivered before the legal deadline expired.
The ruling, issued on October 9, 2026, and published on November 3, concerns a dispute over profit tax, turnover tax, wage tax, and social insurance contributions. Although the company successfully challenged some assessments, the court upheld others.
The case arose following a tax audit examining the company's returns for the years 2019 through 2022. The findings led the Tax Inspectorate to issue additional assessments and penalties in December 2024.
The original profit tax assessment for 2019 amounted to XCG 184,283, accompanied by a penalty of XCG 92,141. A separate turnover tax assessment amounted to XCG 138,429, with an additional penalty of XCG 34,607.
In March 2026, the Tax Inspectorate had already reduced the profit tax assessment to XCG 34,316 and the corresponding penalty to XCG 17,158.
However, the dispute ultimately turned on whether the assessments had been communicated to the company within the legally prescribed period.
Under Curaçao's tax legislation, the authorities generally have five years after the end of the relevant tax year to impose additional assessments. For the 2019 assessments in this case, the deadline expired on December 31, 2024.
The company maintained that it did not receive the profit tax assessment until January 3, 2025, and that it never received the turnover tax assessment.
During the proceedings, the Tax Inspector explained that bailiffs had been instructed to deliver the assessments because the deadline was approaching and postal delivery was considered risky.
However, the documentation that could have demonstrated timely delivery was no longer available.
According to the Tax Inspector's explanation, the relevant delivery records had apparently gone missing during communication between the Tax Inspectorate and the Tax Collector's Office.
The court concluded that the authorities had failed to establish that the profit tax and turnover tax assessments, together with their penalties, had been properly communicated by December 31, 2024.
As a result, those assessments and penalties were annulled.
The ruling illustrates the importance of administrative procedures in tax collection. Even where authorities believe additional taxes are owed, they must comply with the legal requirements governing the issuance and notification of assessments.
However, the company's victory was only partial.
The court upheld the additional wage tax assessment and assessments relating to AOV/AWW, AVBZ, and BVZ social insurance contributions.
Those assessments arose partly from the Tax Inspectorate's determination that the company had declared insufficient salaries for two individuals holding substantial interests in the business.
The company had reported annual salaries of XCG 19,490 and XCG 25,260 for the individuals concerned. The Tax Inspectorate adjusted both amounts to XCG 50,000 under the statutory rules governing customary remuneration for shareholder-directors.
The company argued that lower salaries were justified, referring to the effects of the COVID-19 pandemic and the fact that one of the individuals also worked as a pilot for a local airline.
The court rejected those arguments, finding insufficient evidence to justify departing from the statutory salary standard for the 2019 tax year.
It also noted that the pandemic-related circumstances cited by the company did not establish a reason for reducing salaries in 2019.
Consequently, the wage tax and social insurance assessments and associated penalties remained in effect.
The court also ruled that the Tax Inspectorate had failed to issue timely decisions on the company's objections, which had been submitted in February 2025.
Rather than ordering the Inspectorate to issue new decisions, the court resolved the underlying dispute itself.
The Tax Inspectorate was ordered to reimburse XCG 1,400 in legal costs and XCG 150 in court fees.
The judgment highlights two important aspects of Curaçao's tax system: the obligation of tax authorities to maintain reliable records demonstrating compliance with statutory deadlines and the responsibility of businesses to substantiate their tax declarations.
The ruling does not mean that all the company's tax obligations were cancelled. It specifically invalidates the 2019 profit tax and turnover tax assessments and related penalties while leaving the other assessments in place.
Both parties may appeal the decision to the Joint Court of Justice within the applicable legal period.