In an increasingly interconnected world, international taxes have become a complex landscape thatcompanies and individuals must navigate if they want to do business in Curaçao or in another country. This article aims to provide an overview of some important considerations and strategies for effectively managing international tax liabilities.
By researching and understanding these concepts, companies and individuals can make informeddecisions that optimize their tax position while ensuring compliance with applicable regulations.
Permanent establishment: Research into the concept of a branch/permanent establishment and its significance in international tax planning is important. After all, the establishment of a branch in Curaçao or abroad can lead to tax obligations. Strategies to limit unforeseen exposure to loads should also be explored. For example, a shop, workshop or factory on Curaçao or abroad forms a permanent establishment that leads to profit taxation, but having a storage space with goods or performing supporting activities such as advertising, marketing or providing information from a location does not.
Price fixing and transfer pricing: It is also important to delve into transfer pricing rules of setting business prices for goods and services between affiliated companies. Suppose an entity rents out a business space to an affiliated company, then the rent must be fixed in business. For example, the objectivity of the rent can be demonstrated with a rental value determination. The written record of mutual transactions, such as a rental agreement in this case, is also important.
Benefits of tax treaties: Research into which tax treaties and trade treaties exist, their benefits for preventing double taxation and facilitating cross-border trade is also needed. For example, Curaçao has double taxation treaties with the Netherlands including the BES islands as well as with Aruba and St.Maarten.
Tax havens and substance requirements: Tax havens are being dealt with globally and there is an increasing emphasis on real presence when conducting business activities in a country. Doing business in a tax haven can lead to reputational risk and limitations. Curaçao complies with international standards, which means that Curaçao does not qualify as a tax haven. Curaçao followed the international trend and introduced "substance" requirements to ensure that the tax advantages that Curaçao offers to companies that want to establish on the island are in line with the actual real economic activities that take place here.
In summary, conducting business activities across borders requires international tax
planning that is in line with individual circumstances and business objectives and a thorough understanding of the rules and regulations that apply in each country. By gathering information, staying informed and adopting proactive strategies, businesses and individuals can optimize their tax position while ensuring regulatory compliance.
Zuleika Lasten is a Tax Partner at Soxia,
headquartered at Cas Coraweg 1, Curaçao.
For more information, please contact: T: +599 (9) 736-1616,
E: info@soxia-tax.com
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