The most important taxes to consider when starting a business

BETTER SAFE THAN SORRY

When starting a business, there are several taxes you should take into account, such as the sales tax, the profit tax and the income tax.

Immediately after starting a new business, the director (of the NV or BV) or the entrepreneur should register the company with the Tax Administration (CRIB-department) and with the Social Security Department (SVB) to obtain his registration numbers, in order to be able to pay taxes and premiums.

The first important tax to consider is the sales tax. Every business is obligated to retain this tax on sales, regardless of the nature of the business or its legal structure. Sales tax is normally paid by consumers, because it is charged on the value of the goods sold or services rendered. The sales tax rates are 6%, 7% and 9%, depending on the type of goods sold or services rendered. Taking into account that sales tax is due every month, no later than the fifteenth of each month, this may lead to an increased administrative burden. However, the monthly sales tax is not calculated upon receipt of goods sold or services rendered, but rather when an invoice is issued. This relates to the turnover from the previous month. Even if the business has not sold any goods or services, it is obligated to submit the sales tax declaration form at the Tax Administration.

However, there is an exemption (RKO regulation) for small businesses with a total turnover of less than NAf. 30,000 per year. To qualify, the sole proprietorship must be based in Curaçao and must file an application.

The second type of tax to take into account is the profit tax or corporate income tax. All legal entities, such as public and private corporations, foundations and associations are subject to profit tax. Profit tax is charged on the taxable profits after deduction of related costs, depreciation costs, investment deductions, deductible donations and the carry-forward of unused tax losses. The profit tax rate is 22%.

During their existence, all legal entities are subject to profit tax, and it is levied yearly. For each fiscal year, both a preliminary return (by March 31) and a final return are due (as per June 30) in the following year.

A third type of tax to take into account is the personal income tax. Income tax is due by all owners of sole proprietorships and other similar types of businesses. In order to promote and stimulate the growth of small businesses and start-ups, the income tax provides small businesses and startups with financial incentives, such as the investment deduction regulation for entrepreneurs who invest more than NAf. 5,000 per year in business assets. These entrepreneurs receive a 10% deduction of the initial investment amount. This deduction is applicable in the year of investment. In case of an investment in the maintenance or improvement of a protected monumental building, a higher deduction of 30% of the initial investment amount applies.

Income tax is charged on the taxable income and is due once a year. The taxable income is the total income minus deductibles. Every resident of Curaçao must pay income tax on their worldwide income. Non-residents are also subject to income tax, but only on the income earned in Curaçao. The income-tax rates are progressive, starting at 13% and continuing up to a maximum of 46.5% of the taxable income.

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