"A citizen is deemed to know the law!"

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Jun 6, 2021
3 min read

"A citizen is deemed to know the law! "

With this almost to be called proverb, we want to introduce the biweekly Fiscal Bulletin of Soxia. Starting this month, we will be informing the Amigoe readers every two weeks of not only the tax obligations that must be met but also the tax facilities and possibilities that the law offers to optimize your tax position. Changes in local tax legislation and other current tax events will also be discussed.

Various tax laws of the country of Curaçao contain special regulations. In addition to these regulations, the country of Curaçao also has a separate legislation in which some tax facilities are included. In 1953, the first so-called Tax Holiday legislation was introduced in which incentives were included. A Tax Holiday gives companies the opportunity to appeal to the National Ordinance Tax Facility investments containing rules on the exemption of various taxes when making significant investments in Curaçao and when permanently creating employment for residents of Curaçao. Through the Tax Holiday facilities, the government aims at making the investment climate attractive for foreign investors and at promoting the local investments and therefore the local economy on a large scale. The Tax Holiday legislation has undergone various changes during the years and was last amended a few years ago. Below we will discuss the companies and sectors that can make use of the Tax Holiday, the conditions for applying for a Tax Holiday and the tax benefits.

Companies and sectors

Hotel: first, a company that operates a hotel or lodging with recreational facilities can qualify for a Tax Holiday provided that the construction and initial furnishing of the hotel building requires an investment of at least ANG 5,000,000. In addition, the hotel project must provide permanent and full-time employment for at least ten persons registered in the local population register of Curaçao. However, the hotel project must be aimed at attracting tourists and thus at promoting the visit of foreigners to the island.

Land development:a company that has land development as its business activity, whether or not in combination with the construction of real estate, can also qualify for a Tax Holiday. For example, plots of undeveloped land that are being prepared for construction and where infrastructure and roads are being built. In the case of land development, the requirement of employment does not apply. The land development projects, similar to hotel projects, must be aimed at promoting the visit of foreigners or at social housing.

Industry or producing company: Thirdly, an industry or a producing company that processes or assembles goods in Curaçao into a new commercial product and which meets the aforementioned investment requirement and creates permanent employment to at least ten local persons at the start of its business activities can also apply for the Tax Holiday.

Several sectors: finally, companies whose activities are wholly or almost entirely focused on certain sectors including wholesale and retail trade, health care, modern agriculture and fisheries, the generation and supply of green energy may also be eligible for a Tax Holiday provided that the aforementioned investment requirement is met and at least ten local persons are provided with work at the start of the the business activities.

Tax exemptions: it is fiscally advantageous to apply for a Tax Holiday because the company first of all will qualify for an exemption from import duties for a period of 3 years for materials and goods intended for the construction and first furnishing of a building, for the construction of roads and/or assets for the first establishment of a company. Furthermore, there is an exemption from property tax and profit tax for a period of 5 years for an investment of ANG 5,000,000 and 10 years for an investment of ANG 10,000. 000. The profit tax exemption means that the standard rate of 22% is reduced to a rate of 3%. Finally, there is an exemption from personal income tax for the dividends and other profit distributions that the shareholders receive if the profit is distributed within 2 years of the end of the financial year in which the profit was made.

Temporary relaxation: the Minister of Finance, Mr. Javier Silvania, has temporarily amended the policy regarding the requirements for a Tax Holiday whereby until 31 December 2022 if the project is aimed at attracting foreign visitors, the requirement of 80% that previously applied, has been temporarily reduced to 20%.

The request: the Directorate of Fiscal Affairs is obliged to decide within a period of 3 months after receipt of a complete request. To find out whether your proposed project can qualify for an exemption from import duties, property tax and profit tax, in accordance with the National Ordinance tax facilities investments, please contact us.