Amendments to Curaçao tax legislation | Preferential Tax Regimes
Tax Newsflash Curaçao
The proposal on remediation of the Curaçao Preferential Tax Regimes was approved on June 28, 2018. The proposal includes amendments to align the preferential tax regimes with the internationally accepted standards as recommended by the OECD. This newsflash outlines these amendments.
Why these amendments?
A set of coordinated actions by governments and unilateral measures designed by individual countries have brought about a rapid change of the international tax system. They are intended to both tackle concerns over base erosion and profit shifting (“BEPS”) and perceived international tax avoidance techniques of high-profile multinationals. The recommendations of the BEPS project led by the Organization for Economic Cooperation and Development (OECD) and published in October 2015 are at the root of much of the coordinated activity.
The Action Plan on Base Erosion and Profit Shifting ("BEPS Action Plan") of the OECD has identified 15 actions to address BEPS in a comprehensive manner. The G20 Finance Ministers endorsed the BEPS package in October 2015. It includes the report on Action 5: Countering Harmful Tax Practice More Effectively, Taking into Account Transparency and Substance. The Action 5 Report is one of the four BEPS minimum standards. Each of the four BEPS minimum standards is subject to peer review in order to ensure timely and accurate implementation and thus safeguard the level playing field. All members of the Inclusive Framework, including Curaçao, commit to implementing the Action 5 minimum standard into their local tax legislation and commit to participating in the peer review.
The minimum standard of the Action 5 report also comprises the preferential tax regimes, where a peer review is undertaken to identify features of such regimes that can facilitate base erosion and profit shifting, and therefore have the potential to unfairly impact the tax base of other jurisdictions.
As a consequence of the peer review in Curaçao, the proposal on remediation of the Curaçao Preferential Tax Regimes was approved on June 28, 2018.
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