Curaçao

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Overall Phase 2 Rating is Partially Compliant

Table of Determinations and Ratings of the Combined Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Although this gap should be limited in practice, beneficial ownership information on domestic companies, partnerships, foundations and private foundations may not be available in case these entities do not hold a bank account with a Curaçaon bank or do not engage a local AML obligated person and the beneficial owner is not covered by the scope of the tax requirements (i.e. it is the natural persons who exercise the effective control over the legal person)..  Curaçao is recommended to ensure the availability of information on the beneficial owners of all domestic companies, partnerships, foundations and private foundations in all cases. 
While there is some oversight, there is no rigorous system in practice of monitoring entities’ obligations in all cases and there is minimum enforcement and/or penalties applied generally to ensure the availability of ownership information.  Curaçao should ensure that authorities with oversight responsibilities strengthen mechanisms to oversee entities’ obligations and exercise the enforcement powers as appropriate to ensure the availability of ownership information at all times. 
Phase 2 Rating Factors Recommendations
Partially Compliant.  New tax obligations were introduced in May 2013 requiring all entities to keep all ownership information, including information on all ultimate beneficial owners. Since the laws came into effect on 1 May 2013, there have not been regular oversight and enforcement activities to ensure these new obligations were adequately implemented in practice. In addition, no practical guidance has been issued on the meaning of the term “ultimate beneficial owners” and what information should be maintained by the taxpayer.  Curaçao should monitor the implementation and operation of the laws requiring all entities to have available information on all ownership information, including information on all ultimate beneficial owners. 
   
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.   While there is some oversight, there is no rigorous system of monitoring entities’ obligations to keep accounting information in all cases and there is minimum enforcement and/or penalties applied generally to ensure the availability of accounting information in all aspects. In particular, while international (offshore) companies are subject to tax filing requirements, there are no regular oversight and enforcement activities carried out by the Curaçaon tax administration to ensure that they fulfil their accounting requirements.   Curaçao should ensure that authorities with oversight responsibilities develop mechanisms to monitor entities’ obligations and exercise the enforcement powers as appropriate to ensure the availability of accounting information at all times. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.   Although the Curaçaon authorities consider that the law allows for access to information on entities covered under grandfathering provisions and court cases have been decided in favour of this interpretation, 23 EOI requests on these entities remained outstanding at the end of the review period and some of the positive Court cases have been subject to an appeal.  Curaçao should ensure that there are clear access powers to access information concerning entities subject to grandfathering provisions. 
During the peer review period, Curaçao has not applied any enforcement powers, even where information that should have been in the possession of the person who was served the Notice to produce Information was in fact not produced.  Curaçao should ensure that enforcement powers are applied where appropriate in cases where information is not produced. 
Phase 2 Rating Factors Recommendations
Partially Compliant.  Although Curaçao amended its EOI Manual in August 2017 to streamline its procedure to access information, during the review period, Curaçao experienced long delays and some obstacles in the practical application of the procedure to access information, which resulted as of May 2017 in 58% of the requests responded to after one year or still pending at the end of the review. Since May 2017 and up to the cut-off date of this review (August 2017), Curaçao has worked on reducing the backlog of the EOI requests and on ensuring an efficient access to information.  Curaçao should monitor the streamlined procedure set out in the revised EOI Manual to access information to ensure effective and timely exchange of information in practice. 
   
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   There are no exceptions from the post-exchange notification procedure in Curaçao.  It is recommended that suitable exceptions from post-exchange notification requirement be introduced to facilitate effective exchange of information (e.g. in cases in where the notification is likely to undermine the chance of the success of the investigation conducted by the requesting jurisdiction). 
Phase 2 Rating Factors Recommendations
Largely Compliant.  Due to the difficulties and deficiencies in the EOI process during the peer review period, the procedures for notification that came into effect on 1 May 2013 have not been sufficiently tested in practice to ensure that they do not prevent effective exchange of information.   Curaçao should monitor the implementation of the 2013 rules and ensure that information can be provided in response to a request in a timely manner. 
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.   Although Curaçao has not applied a more restricted interpretation of the foreseeably relevant standard during the peer review period, deficiencies in EOI prevented a complete assessment of the application of the foreseeable standard by Curaçao in practice. In addition, Curaçao only amended recently its EOI Manual to clarify how to interpret the foreseeable relevance standard, including regarding the determination of the foreseeable relevance of group requests.  Curaçao should ensure that its interpretation of the foreseeably relevant standard is applied in accordance with effective exchange of information. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.   While Curaçao worked on reducing the backlog of the pending EOI requests and on ensuring a stable EOI organisation since the end of May 2017, during the review period, there were serious deficiencies concerning personnel resources dedicated to EOI and monitoring of internal deadlines. This resulted in Curaçao not being able to respond in a timely manner to its requests. Two peers indicated that the lack of timeliness resulted in some cases in the withdrawal of the requests or the inability for the EOI partners to use the information provided by Curaçao.   Curaçao should continue its progress to improve the EOI processes and ensure that adequate resources are put in place to monitor its timeframe for providing quality and timely responses to EOI partners. 
Phase 2 Rating Factors Recommendations
Partially Compliant.  During the period under review, Curaçao did not provide status updates to its EOI partners within 90 days as it is required under the OECD Standard when the competent authority was unable to provide a substantive response within that time, unless prompted by the EOI partner.  Curaçao should ensure it provides a status update to its EOI partners within 90 days when the competent authority is unable to provide a substantive response within that time. 

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.