WILLEMSTAD - In October 2017, the Forum on Harmful Tax Practices ("FHTP") of the Organization for Economic Co-operation and Development ("OECD") based on action point 5 of the "Base Erosion and Profit Shifting" ("BEPS") provided the preferential regimes from various countries, including those from Curaçao.
The findings have been published in the "Inclusive Framework Harmful Tax Practices 2017 Progress Report on Preferential Regimes". This report states that the tax legislation of Curaçao has three preferential regimes that are harmful to the financial sector and that needed to be changed before the October 2018 assessment started. The preferential regimes are the regulation of the exempt company, export regulation and the economic zone regulation.
As a result, Curaçao has committed itself to changing the regimes in accordance with the guidelines and recommendations of the OECD. To achieve this, the government has introduced several legislative changes in close cooperation with the OECD in the past year.
These amendments have been laid down in the National Ordinance containing additional transfer pricing documentation obligations (P.B. 2018, no. 30), the National Ordinance for the repair of preferential tax regimes (P.B. 2018, no.33) and the National Ordinance Tax Receptions 2018 (P.B. 2018, No. 83).
In the National Ordinance repair preferential tax regimes, Curaçao has introduced a new preferential regime, namely the innovation box. Furthermore, in the National Ordinance on the repair of preferential tax regimes, the regulation of the exempt company is replaced by the regulation of the Curaçao Investment Company.
The FHTP assessed the regimes of various countries, including those of Curaçao, during two meetings (in October 2018 and January 2019). The findings are included in the 2018 Progress Report on BEPS action 5 and approved by the Inclusive Framework. This report will be published during this week.
The following points have been included in this report: that the arrangement of the Curaçao Investment Company is not harmful; the export regime has been abolished; that the economic zone regulation is no longer a preferential regime that falls within the assessment range of the FHTP and that the innovation box is not harmful. This means that the regimes of Curaçao are in accordance with the guidelines and the recommendations of the OECD and Curaçao therefore to action point 5 of the BEPS.
Since the start of the BEPS project, the OECD has so far assessed preferential regimes of 70 jurisdictions as a result of the BEPS Action 5, 255. The OECD indicated during the last meeting in January 2019 that 127 countries are part of the FHTP and have committed themselves to apply the BEPS action plan.
