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Curaçao: Domestic Corporate Taxation

Calculation of Taxable Base

Income is widely defined and includes capital gains. Operating losses can be carried forward for ten years (five years for IBC companies and six years for shipping and aviation companies). Companies which have been granted tax holidays may carry forward losses from their first four years indefinitely (six years for shipping and aviation companies). There is no provision for carry-back of losses.

As a rule, tax and financial accounts in the Netherlands Antilles are required to be identical. There is no provision for group or consortium relief.

Inventory valuation should be commercially justifiable; subject to this requirement, both LIFO or FIFO are acceptable.

Valuations for tangible fixed assets can include incidental costs of purchase; depreciation is normally by straight-line over the useful life of the asset, but reducing balance is also permitted. One third first-year capital allowances are available. Intellectual property assets can be depreciated over their useful lives; goodwill generated on purchase is depreciated over three to five years

Charitable donations between 1% and 3% of net income (after carry-forward losses) are deductible.

Income from foreign property (real estate) or from subsidiaries whose profits are derived wholly or almost wholly from foreign property is exempt from taxation.

Dividends received from other resident corporations are not traditionally taxed (but tax is applied to dividends received from offshore Netherlands Antilles corporations). A participation of 5% or more in the paid-up capital of a foreign corporation means that normally-taxed dividends from that corporation are taxed at 10% of the usual rate. Under the NFF this rate is reduced to 5%, and this is also the rate that will apply to NABV companies.

There are no 'cfc' rules: the undistributed income of foreign subsidiaries is not taxed.

Vessels for representative purposes, fines imposed by the Court, expenses related to criminal acts, bribes, office at home, travel, clothing, telephone and Internet subscription and personal care are not deductible.

But gifts, food, beverages, representational expenses, courses, musical instruments, audio equipment, tools, and some office equipment for businesses are 80% deductible.

It is particularly important for businesses with offshore companies to note that, from 2001, it was no longer be possible to deduct the interest paid to an offshore company.



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