The fundamental change is that Curacao has chosen to tax on the basis of territoriality. Meaning that only income generated in Curacao will be taxed with Curacao profit tax. There needs to be a link -a nexus- between the income and Curacao. Activities on Curacao soil or e.g. the lease of Curacao real estate will fall under the scope of the Curacao profit tax. Same goes for so-called passive income. So in case a Curacao based company has a Swiss bank account yielding (passive) income it will be deemed local income.
Income generated abroad will as a rule of thumb not fall under the scope of the Curacao profit tax.
There will be companies that shall generate local as well as foreign income. It goes without saying that evidence of the place or origin of that income shall be of the utmost importance.
When as a sole proprietor you generate foreign income you should convert to a company structure.
Some qualifying activities will be taxed against a profit tax rate of 3%
A new profit tax rate of 3% has been introduced for income from local enterprise for designated qualifying activities that take place in or from Curacao.
Mentioned activities are:
1 building and improving airplanes and ships, as well as repairing and maintaining airplanes and ships with a length of at least 10 meters and machines, installations and material located in and for use on board of these airplanes and ships;
2 services provided by call-, service-, or datacenters in so far as they provide support activities to enterprises with an annual turnover of at least ANG 50 million (USD 28 million);
3 services provided by warehousing companies; and,
4 services provided in or from Curaçao to non-related investment companies and managers of investment companies.
Muller's tax take:
With the newest changes our tax legislation has been further modernized en will offer -specifically for entrepreneurs with a focus on outbound services and trade- quite interesting fiscal possibilities. Once again -as with any change in tax legislation- things have become more complicated. This makes that -if one has plans on starting or converting a business in Curacao- it seems wise to consult a qualified tax lawyer/consultant in an early stage.
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