#45: The wind has changed

Until a few years ago, criminal prosecution of tax offences in the Caribbean parts of our Kingdom was not very common. In recent years, the Public Prosecution Service of Curaçao has made its presence in the tax domain and is prosecuting tax offences. In some cases more successful than others. Nevertheless, it is clear that the Public Prosecution Service of Curaçao is wide awake. Very recently, agreements between the Public Prosecutor’s Office of Curaçao and the Tax Authorities of Curaçao were published. These Notification, Transaction and Prosecution Guidelines (ATV-guidelines) lay down which tax cases are eligible for criminal prosecution and which cases will be dealt with administratively. From our experience at Hertoghs Dutch Caribbean we learn that the wind has changed. What can we expect?

It is clear that tax fraud has been underexposed on Curaçao and this also applies to other Caribbean parts of the Kingdom of the Netherlands. The Curaçao Court of First Instance acknowledges this in so many words in earlier judgments. The Court seems to blame this on the tax morale on the island, or rather: the lack of it. On the other hand, Curaçao citizens  blame the Tax Inspectorate for acting arbitrarily against taxpayers, as the tax burden is not evenly distributed. The fact that the tax morale on the island is “underdeveloped” could then be considered a logical consequence. In our opinion, this factor plays a role in the defense in tax proceedings and in tax related criminal proceedings. After all, the principle of trust regarding how things were established in the past is applicable.

However, this does not change the fact that anyone can be pulled into a discussion with the tax authorities or the prosecution service related to not complying with tax law obligations. Especially now that the Public Prosecutor’s Office and the Tax Inspectorate are preparing themselves with the ATV guidelines in order to fight tax abuses. These guidelines are a publication of the agreements made between the Public Prosecution Service, Customs, the Tax Inspectorate, the Tax Affairs Sector (SFZ) and “Stichting Belastingaccountantsbureau” (SBAB). The guidelines describe 1) which cases must be reported, 2) on the basis of which information the cases are selected and 3) which cases are dealt with under criminal law and which cases are dealt with under administrative procedures. In the blog of our colleagues these agreements and the way in which the defense can benefit from them are further explained.

The guidelines suggest that, in addition to the Public Prosecution Service, the Tax Inspectorate will also play an active role in tackling tax fraud. The question is whether this is a realistic target. Only last year, the Tax Inspectorate and the Tax Collector stated in the press that there has been a huge backlog in sending out tax assessments and that the Tax Collector is also forced to leave money ‘on the streets’. The lack of capacity is therefore a problem. At the time, they also announced that they were no longer waiting for the ongoing projects to reorganize the Inspectorate, but that they were setting up the reorganization themselves. It will have to become clear whether the budget problems can be overcome in order to make up for lost time by hiring sufficient personnel.

In the meantime, the Public Prosecutor’s Office might not want to wait for this to be sorted and take matters into its own hands…

Do you have any questions about this subject, are you confronted with a related issue and would you like to discuss this with us? Please feel free to contact us via boezelman@hertoghsadvocaten.nl and boer@hertoghsadvocaten.nl.

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