Curacao is known as a jurisdiction that provides investors with a variety of opportunities.
Local experts from TMF Group and Baker Tilly Curacao outline the benefits of the E-Zone – aimed at e-commerce, and the Export Facility regime, which facilitates companies involved in international trade in goods or services.
The E-Zone regime
The E-Zone is a geographical area and its tax incentives are only available for companies admitted to that area. Only local or public entities with a capital divided into shares (limited liability companies) will be admitted as per the approval of the local government. These must be companies exporting goods to, and/or performing services for, clients outside of Curacao. To qualify, they are expected to contribute to the economic expansion of Curacao.
The main benefit of the E-Zone regime is that the net profit is subject to a tax rate of 2%, while no import duties, turnover tax or other taxes are due. In order to qualify, all goods and services should be delivered to clients outside Curacao or to another E-Zone company.
Activities excluded for the E-Zone tax regime are, for example, activities relating to income from investments and intellectual property, service providers, management companies (trust companies), civil law notaries, lawyers, registered accountants, tax advisers and companies providing similar types of services.
More details in the full publication: Curacao special tax regimes: E-Zone and Export Facility regime.
The Export Facility regime
This is a tax incentive for companies generating at least 90% of their profits outside of Curacao. The Export Facility regime can be used by local legal entities but also by foreign legal entities with a permanent establishment in Curacao (“export facility company”) with actual presence in Curacao. Learn more on the factors that determine this presence here.
Different from the E-Zone companies, the export facility companies does not have to be located in a designated area and qualify for the export facility regime, if the activities listed here take place.
If all the requirements are met, the foreign profit of a qualified export facility company will be taxed as followed:
- 95% of the foreign profit is tax against 2.2% (10% of 22% tax rate), resulting in an effective tax rate of 2.09%; and
- 5% of the foreign profit is tax against the regular profit tax rate of 22% (for 2016), with an effective tax rate of 1.1%, resulting in a combined effective tax rate of 3.19%.
Please note that income realized by an export facility company from a permanent establishment or a qualifying participation, will be exempt under the regular Curacao profit tax regime.
Comparison between the E-Zone regime and the Export Facility regime
Details in the full publication: Curacao special tax regimes: E-Zone and Export Facility regime
TMF Group Curacao is one of the biggest international financial service providers on the island.
Contact our team of experts for more information.
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