PwC: The consequences of the Panama Papers! (Aruba)

PwC Dutch Caribbean discussed the latest international and local tax developments in the seminar "2017: The new fiscal reality as a result of the Panama Papers!”

Oranjestad, Tuesday, December 6, 2016 -PwC Aruba organized on Friday 2 December 2016 a seminar on the new fiscal reality after the publication of the Panama Papers. The developments that followed the Panama Papers have resulted in a greater focus worldwide on the exchange of tax information in order to facilitate tracing undeclared income by tax payers.

Hans Ruiter (Tax Partner at PwC Aruba) noted “In recent years we have seen an increase in the demand for transparency and information exchange between tax authorities worldwide”. Ruiter mentioned that the introduction of the Foreign Account Tax Compliance Act (FATCA) by the United States, was one of the first steps towards exchange of tax information. The FATCA legislation obliges countries worldwide to provide information automatically about US taxpayers to the IRS. Furthermore, Ruiter also elaborated on the publication of the Panama Papers and the strong boost the unexpected publication on April 3rd gave to the aforementioned developments.

Partly in response to these recent 'leaks' the European Parliament adopted legislation for automatic exchange of banking information between Member States of the European Union last 22 November. It was mentioned in the European Parliament that recent 'leaks' of information such as Lux Leaks and Panama Papers have shown the importance of introducing new measures to ensure transparency. A second and potentially more drastic measure approved by Parliament is the obligation for Member States of the European Union to establish public registers in which the ultimate beneficial owners (UBO) of partnerships and trusts must be registered.

During the seminar the speakers of PwC discussed the new laws and regulations that have been introduced internationally and in Aruba. The speakers were Roland Brandsma and Renate Lange, both Tax Partner at PwC Netherlands, Hans Ruiter (Tax Partner at PwC Aruba) and Anushka Lew Jen Tai (Senior Tax Manager at PwC Aruba).

Roland Brandsma addressed the European versions of the Panama Papers and the response of the United States, the European Union and the Organization for Economic Cooperation and Development (OECD).

Renate De Lange then spoke about the developments surrounding the UBO register in the Netherlands, the fight of the tax authorities against the so-called Secluded Private Equity (in Dutch: Afgezonderd Particulier Vermogen or APV) and the proposed changes to the APV regime in the Netherlands. Renate ended her presentation with the possibilities and limitations offered by the changes in Dutch tax regime for foreign investment companies.

After a short break Hans Ruiter explained the difference between inbound and outbound investments. Moreover due to a new tax regime (10% profit tax and no dividend withholding tax) for certain qualifying activities, Aruba could be a favourable place for international financial services.

Anushka Lew Jen Tai, CRS expert working at PwC Aruba ended the seminar with a presentation on the impact of CRS globally and its consequences for tax residents of Aruba. In conclusion Anushka Lew Jen Tai discussed the statutory penalty regime that applies to Aruba taxpayers who did not, or not fully, report their income from abroad of which it is expected that the tax authorities will receive this information from abroad in the coming years and the possibility to voluntarily correct to prevent penalties of the tax authorities.

The tax experts of PwC concluded that provided that Aruba enacts legislation that requires reporting in accordance with the CRS, shortly many new information streams will start to flow which will also have consequences for residents of Aruba; for CRS the exchange of information for the year 2017 would start in 2018. Tax payers who did not, or not fully, report their investment income from abroad may be in for an unpleasant surprise when this information is shortly exchanged automatically with the tax authorities of Aruba. It is therefore important to be well prepared and timely take the necessary actions towards the tax authorities.