Curaçao VAT plans move from VAT implementation proposal to political priority
Curaçao’s long-discussed plans to replace its sales tax regime with a modern VAT system have taken a significant step forward, with the reform now designated as a formal political priority under the island’s economic reform programme with the Netherlands.
This could make the Island, a constituent country within the Kingdom of the Netherlands, the 177 country with VAT.
According to Curaçao’s newly published 2026 Landspakket Implementation Agenda and Progress Report, the introduction of VAT and the modernisation of the Tax Department will be key government priorities over the coming months.
The report highlights “clear administrative commitment” to the project and confirms that a detailed plan for the new tax system is expected before the summer.
VAT at the centre of fiscal modernisation
The proposed VAT forms part of a wider package of reforms aimed at strengthening Curaçao’s public finances and improving tax administration.
Authorities have repeatedly argued that the current turnover tax system is no longer fit for purpose. A VAT regime would broaden the tax base, improve compliance and create a more efficient mechanism for collecting indirect taxes across the economy.
The latest report states that the future tax system must generate sufficient structural revenues to fund government services and public investment while supporting a more transparent and customer-focused tax administration.
Tax authority overhaul runs alongside VAT project
Alongside the VAT reforms, Curaçao is also pursuing a major reorganisation of its Tax Department.
A joint action plan is being developed with Dutch authorities to modernise tax administration, improve enforcement and strengthen operational capabilities ahead of any VAT implementation.
The report acknowledges that several Landspakket reforms have experienced delays. However, the elevation of VAT to a political priority suggests the government is seeking to accelerate progress on one of the most significant elements of its fiscal reform agenda.
Government wants to close tax gap with withdrawal of Sales Tax
The government of Curaçao is advancing plans to replace its current sales tax system with a value-added tax (VAT) regime, marking a significant shift in the island’s fiscal strategy. The move is intended to enhance revenue collection efficiency, broaden the tax base, and modernise the nation’s tax system in line with international standards.
In the 9 September 2025 opening of Parliament, the Governor confirmed a commitment to introduce VAT as part of a wide fiscal modernisation.
In doing so, it would join 175 countries with VAT.
In a public interview on 7 May 7 2025, Curaçao’s Minister of Finance emphasised the potential benefits of a VAT framework. The transition, he noted, would enable the government to improve tax compliance and reduce distortions caused by the existing sales tax, which currently operates with multiple tiers (6%, 7%, and previously 9%). However, the Minister also acknowledged challenges, including the regressive nature of consumption taxes. To mitigate the disproportionate impact on low-income households, the government is considering a monthly compensation scheme for minimum wage earners and other vulnerable groups.
While the timeline for implementing VAT in Curaçao remains under discussion, the combined momentum of international guidance, domestic political will, and institutional reform suggests that the transition is approaching a decisive phase. As the government continues stakeholder engagement and technical evaluations, VAT is being positioned not just as a tax change, but as a cornerstone of broader economic modernisation.
IMF support for modernisation of indirect tax
This initiative aligns with longstanding recommendations from the International Monetary Fund (IMF), which has urged Curaçao since 2022 to move beyond mere administrative adjustments to its sales tax regime and adopt a fully-fledged VAT system. In its 2022 Article IV report, the IMF stressed that VAT would reduce inefficiencies in the tax system and better support long-term economic growth. It also recommended removing provisions that allow taxpayers to reduce import tax liabilities on items already subject to sales tax.
In preparation for its 2025 Article IV review, the IMF has agreed to provide technical assistance to Curaçao, supporting reforms not only in taxation but also in public finance, healthcare, and pension systems. The collaboration is seen as a crucial step in bolstering investor confidence and demonstrating Curaçao’s commitment to fiscal responsibility.
“This collaboration is an important step in ensuring long-term economic stability,” said Finance Minister Javier Silvania during a working visit to Washington, D.C. “It reflects our commitment to responsible governance and transparent fiscal management.”
The IMF assistance will focus on improving debt sustainability, public investment efficiency, and tax administration modernization—all of which are critical for the successful implementation of VAT. Drawing on lessons from regional counterparts like Sint Maarten, the IMF notes that coordinated tax reforms and IT upgrades are essential to reduce leakage and ensure compliance.
