New legislation ‘Minimum tax in The Caribbean Netherlands’.

New legislation ‘Minimum tax in The Caribbean Netherlands’.

January 30, 2024

A new tax in The Caribbean Netherlands
On January 1st 2024, the new legislation on the Minimum tax in  The Caribbean Netherlands came into force. Based on this new legislation, The Caribbean Netherlands introduces a new minimum taxation of 15% on profits of a Caribbean Netherlands entity or branch that belongs to a group of companies generating ≥ €750 million turnover per year.

This tax is applicable to entities that are established on The Caribbean Netherlands, unless The Caribbean Netherlands entity generates a turnover of less than € 10 million per year and € 1 million profit per year. There are exemptions for governmental entities, NGO’s, intra-group support entities, entities with a significant substance on The Caribbean Netherlands and others.

Covered taxes
The new minimum tax takes into account taxes that are already levied on The Caribbean Netherlands, like ‘vastgoedbelasting’ (real estate tax), ‘opbrengstbelasting’ (dividend tax) and ‘kansspelbelasting’ (gambling tax). Not part of the covered taxes are for instance wage tax and ABB.

Taxable basis
The taxable basis for the minimum tax is the profit of The Caribbean Netherlands entity, minus a substance based income exclusion of 9.8% on payroll expenses and 7.8% on tangible assets.

Method of levy
Seeing that no profit tax exists on The Caribbean Netherlands, the minimum tax will likely play a role for entities or branches on The Caribbean Netherlands, belonging to a group generating ≥ € 750 million turnover annually.

The minimum tax is normally levied as a top-up tax, meaning that the excess profit is taxed against 15% minus the effective tax rate already paid in Covered taxes.

If a Caribbean Netherlands entity has a subsidiary in a state that does not levy at least 15% tax on income, The Caribbean Netherlands will include the income of that subsidiary in the taxable basis for the Minimum tax Caribbean Netherlands.

The tax for 2024 is paid via self-assessment.

Written By

Wendell Meriaan

Partner, Board Member, Head of Tax Department