New export facility by January 1, 2014
Willemstad 17 Dec 2013
By Arne Kattouw
The parliament of Curaçao adopted a new export facility on Monday, December 16th. This is an important new product for the international financial sector in Curaçao.
In 2001, took the former Netherlands Antilles from their position as a tax haven with the introduction of the New Fiscal Framework (NFR). Instead of the old tax credits that were applicable only for foreign entrepreneurs new facilities were introduced where every operator who meets the requirements, including a local company, can use. However, a transition period was allowed for companies that used the old offshore facilities. This transition period will last until 2019. Many companies have already switched to the new features that were introduced with the NFR but for a number of companies were not sufficiently attractive alternatives. These companies would also be possible, within sight of the end of the transitional arrangements, will move their operations to other jurisdictions that damage would be caused to Curaçao as an international financial center. This would also have an adverse effect on the financial situation of the island by a decline in tax revenues from these activities. These companies are now generally taxed at a rate of 2.4 to 3 percent. Under the new export regime, the tax burden will amount to about 4 percent.
The new export regime now offers an alternative to a large proportion of the companies that still make use of the transitional arrangement. One of the two main conditions for use of the new regime is that 90 percent or more of the company’s activity is focused on abroad. The second important condition is that there must be a real presence of the company in Curaçao which is appropriate to the nature and scope of the activities of the company. Further included in the law which activities are permitted. This, however, is broadly formulated. Admitted:
– Exports of goods and products;
– International trade and services;
– Storage and warehousing services for international trade
– Repairs and maintenance to be carried out in Curaçao on goods exported for that purpose to be transported here and after;
– Repair and maintenance services carried out abroad;
– Financial services, including lending and the provision of intellectual property rights, holding activities and membership of cooperatives;
– Other services to foreign clients.
There are also some activities that are explicitly excluded from the new regime. These are similar to those which also apply to the e-zone. This involves keeping the management of companies established in Curaçao and other related trust services as well as services of notaries, lawyers, accountants, tax consultants and corresponding services.
The new regime provides both a durable solution for companies that are still in the transitional arrangements of the NFR use to also set to continue in Curacao in later years. On the other hand, the regime offers new opportunities for the international financial sector to attract businesses. The regime is competitive and meets the international trend in which to accept tax to be in some degree requirements for a fair presence of bodies in the country of residence. The notes to the export regime can be concluded that the determination of the fair presence comparable criteria will be applied to that instance also applies to Netherlands-resident entities engaged in international services.
Besides export regime of Curaçao parliament on the same day also approved a private member’s bill of the States with regard to insurance companies that bill aims to increase the attractiveness Curacao for insurance companies operating internationally, including the so-called captive insurance companies, mostly bodies that are part a multinational company engaged in ensuring the global risks of this multinational. Now this proposal is approved, it will first have to be approved by the Council of Ministers and the Advisory Council will still have an opinion on that. However, it is expected that this proposal still will shortly enter into force. The export regime is expected to be published before the end of the year and then come into effect on January 1, 2014.
Arne Kattouw is Office Professional expertise of PwC Tax Dutch Caribbean Curaçao.
