Hand Book Tax on Curacao (Versie 2010)

[Pages:128]Entrepreneurship on Cura?ao

Manual for new and small entrepreneurs on taxes, social insurances and other relevant topics.

Which authorities do entrepreneurs run into? Where do entrepreneurs register their business? Which advantages are in place for entrepreneurs? What are the rules and regulations with respect to keeping the books of the business? Which facilities exist for new and small entrepreneurs? These are all important questions to new and starting entrepreneurs, which we will try to answer in this manual.

2010

Entrepreneurship on Cura?ao

Manual for new and small entrepreneurs on taxes, social insurances and other relevant topics.

This is a publication of Stichting Belastingaccountantsbureau May 2010

Translated from Dutch by SonjaJ.M. Damen-van Diemen RA, CPA

All rights reserved. Nothing from this publication may be multiplied, stored in a digital file, made public, in any form or any way, neither electronically, mechanically, by photocopying, prerecording or in any other manner, without the prior written consent of the editor.

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Foreword

To become an entrepreneur is the easy part of entrepreneurship. To truly behave like one and to stay in business is a more difficult task. Each entrepreneur is faced with both pleasant and unpleasant things on a daily basis. Each entrepreneur has to deal with the multiple aspects of entrepreneurship, such as purchasing and selling goods and/or rendering services, establishing a policy on personnel, managing the costs of the business, keeping the books of the business and paying taxes and social premiums. In addition to this, each entrepreneur also has a private life with often a partner and children. An entrepreneur must therefore develop sufficient skills to be able to divide his attention between his business and private life in a balanced manner.

Besides running his business each entrepreneur must comply with all kinds of laws, rules and regulations. Sometimes the information you need appears difficult to acquire. Sometimes the information you receive is not entirely clear. Often the information must be gathered from different agencies and organizations, causing you to lose valuable time.

I am therefore delighted that Stichting Belastingaccountantsbureau initiated this manual on taxes, social insurances and other relevant topics for new and small entrepreneurs. This manual offers entrepreneurs essential information on a wide range of topics with respect to entrepreneurship. In addition to the explanation of the various taxes and social insurances, this manual also addresses a number of organizations entrepreneurs may run into.

This manual is an example of innovative and positive attention for entrepreneurs, who truly form the basis of our economy. I hope that this manual will be appreciated by the entrepreneurs and will provide all the necessary information for conducting their business.

Mrs. Drs. E.T. de Lannooy Minister of Finance

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Introduction

New and small entrepreneurs on Cura?ao face many rules and regulations. They are confronted with tax legislation, social laws, licenses and permits, but also with registrations, for example with the Dienst voor Arbeidszorg (Labor Services) and the Kamer van Koophandel (Chamber of Commerce). Besides that, entrepreneurs can use certain facilities and can apply for certain subsidies. There are a number of organizations to help entrepreneurs with, for example, putting in the request for the use of a specific facility or to obtain a certain subsidy. This manual was written to facilitate new and small entrepreneurs on Cura?ao. This manual offers entrepreneurs essential information on a wide range of topics with respect to entrepreneurship.

This manual is primarily based on interviews and literature studies. The interviews were conducted with employees of the various organizations involved with the rules and regulations for entrepreneurs, amongst other things, with the rules and regulations on taxes and social insurances.

The editor would like to thank everyone who has contributed to the realization of this manual by providing recommendations and support. Without their help this manual could not have been published.

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Table of contents

Foreword

3

Introduction

4

Table of contents

5

Summary

9

Chapter1 Introduction

11

Chapter 2 Entrepreneurship

13

2.1 What is an enterprise?

14

2.2 Who is entrepreneur?

14

2.2.1 Entrepreneurfor turnover tax purposes

15

2.2.2 Entrepreneur for income tax purposes

15

2.3 Schedule: step-by-step plan on how to start a business

15

2.4 Legal forms

17

2.4.1 Sole proprietorship

17

2.4.2 Partnership

17

2.4.3 Firm (Vennootschap Onder Firma (VOF))

18

2.4.4 Man/woman firm

18

2.4.5 Limited partnership (Commanditaire vennootschap)

19

2.4.6 Private limited company / close corporation(Besloten Vennootschap (BV))

19

2.4.7 Public limited company / public corporation (Naamloze Vennootschap (NV))

19

2.4.8 Foundations and Associations

20

2.4.9 Diagram of all legal forms

21

Chapter 3 Kamer van Koophandel (Chamber of Commerce)

23

3.1 Handelsregister (Trade Register)

24

3.2 The department of investment promotion and business activities

25

3.3 Legal forms

25

3.4 Registration procedures

26

3.4.1 Sole proprietorship and Firm (VOF)

26

3.4.2 Close and Public Corporations

26

Chapter 4 Taxes

29

4.1 Registration with the Inspectie der Belastingen (Internal Revenue Service)

31

4.2 Turnover tax

33

4.2.1 The delivery of goods

33

4.2.2 The rendering of services

33

4.2.3 Exemptions

34

4.2.4 The import of goods

34

4.2.5 Administration

35

4.2.6 Invoices

35

4.2.7 Time at which the turnover tax becomes payable

36

4.2.8 Declaration and payment of turnover tax

36

4.2.9 To complete the tax return

37

4.2.10 Reassessment of taxes

37

4.2.11 Regulation for small entrepreneurs (RKO regulation)

37

4.3 Profits tax

40

4.3.1 What is profits tax?

40

4.3.2 Who has to pay profits tax?

40

4.3.3 When do you have to pay profits tax?

41

4.3.4 Differences between the commercial annual accounts and

the annual accounts for tax purposes

42

4.3.5 Calculation of profit

44

4.3.6 Replacement reserve

44

4.3.7 Fiscal compensation of losses

45

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4.3.8 Foundations and Associations

47

4.3.9 Tax holiday and E-zone

48

4.3.10 Questionnaire

49

4.4 Income tax

51

4.4.1 Income tax

51

4.4.2 Who has to pay income tax?

51

4.4.3 When do you have to pay income tax?

51

4.4.4 Withholding of income tax: liability of the employer

52

4.5 Payroll tax

54

4.5.1 Personnel and taxes

54

4.5.2 Forms

57

4.5.3 Declaration and payment

60

4.5.4 The term wages

61

4.5.5 Expense allowances

63

4.5.6 Fixed expense allowances

64

4.5.7 The ultimate responsibility for the payment of payroll tax

and social insurance premiums (ketenaansprakelijkheid)

65

4.6 Administration and taxes

68

4.6.1 Orderly administration

68

4.6.2 Cash records

69

4.6.3 Tips

69

4.7 Costs and taxes

70

4.7.1 Costs

70

4.7.2 Deductible and non-deductible costs

70

4.7.3 Real estate

73

4.8 Investments and purchases

75

4.8.1 What are purchases?

75

4.8.2 What are investments?

75

4.8.3 What are operating assets?

76

4.8.4 Depreciation and accelerated depreciation on operating assets

76

4.8.5 Investment allowance

79

4.8.6 Capital disposal charge

80

4.9 Car expenses and taxes

81

4.9.1 A company car or a private car?

81

4.9.2 The employee drives a company car

82

4.10 Objection and appeal

84

4.10.1 Objection

84

4.10.2 Appeal

84

4.11 Administrative fines

85

4.11.1 Omission fines

85

4.11.2 Offence fines

85

Chapter 5 Stichting Belastingaccountantsbureau

86

5.1 The organization of Stichting Belastingaccountantsbureau

87

5.2 Tasks of Stichting Belastingaccountantsbureau

87

5.3 Audit types

88

5.3.1 What is a tax audit?

88

5.3.2 Observation (WTP)

88

5.3.3 Special audits

89

5.3.4 Flash audits

89

5.4 Tax audit procedures

89

Chapter 6 Social insurances

91

6.1 What are social insurances?

92

6.2 Registration with the Sociale Verzekeringsbank (SVB)

93

6.3 How to pass on changes?

94

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6.4 Social insurances

94

6.4.1 General old age insurance (AOV)

94

6.4.2 General widows, widowers and orphans insurance (AWW)

96

6.4.3 General insurance for extraordinary medical expenses (AVBZ)

97

6.5 Employee insurance schemes

98

6.5.1 Health insurance

98

6.5.2 Accident insurance

101

6.6 Cessantia regulation

102

Chapter 7 Dienst voor Arbeidszorg (Labor Services)

104

7.1 What is the Dienst voor Arbeidszorg (Labor Services) (DAZ)?

105

7.2 Who is the DAZ have been intended?

105

7.3 Registration with the DAZ

105

7.4 What is a labor register?

106

7.5 How to pass on of changes to the DAZ?

106

7.6 Tasks of the DAZ

106

Chapter 8 Dienst Economische Zaken (DEZ) (Department of Economics)

108

8.1 E-fondo regulation

109

8.2 ADA regulation

109

8.3 Faston regulation

111

8.4 Other regulations/subsidies

112

Chapter 9 Licenses

113

9.1 Permit to establish a business (Vestigingsvergunning)

114

9.1.1 Ground plan

115

9.2 License based on the Public Nuisance Act (Hinderwetverordening)

115

9.3 Licenses based on the Country Regulation on Licenses

(Vergunningslandverordening)

116

9.4 Import license

116

9.5 Dispensation from the Shop Trading Hours Act

(Landsverordening Winkelsluiting)

117

9.6 Licenses for overtime and different working hours

117

9.7 Resident and work permits

117

Chapter 10 Customs

118

10.1 Import

119

10.2 Storage

120

10.3 Exemptions

120

10.4 Transit

121

10.5 Objections

121

10.6 E-zone

121

Chapter 11 Accompanying organizations

123

11.1 Foundation Sedeck

124

11.1.1 Objectives of foundation Sedeck

124

11.1.2 Who is foundation Sedeck intended for?

125

11.1.3 Other services of foundation Sedeck

125

11.2 Foundation Stimul-IT

126

11.2.1 Foundation Stimul-IT

126

11.2.2 Who is foundation Stimul-IT intended for?

126

11.2.3 Activities of foundation Stimul-IT

126

11.2.4 E-fondo (eBusiness fund)

127

11.3 Administrative offices

128

11.3.1 What is an administrative office?

129

11.3.2 Activities of an administrative office

129

11.3.3 Who is an administrative office useful for?

129

11.3.4 Application procedure

130

List with most important addresses and telephone numbers

131

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Summary

Chapter 1 gives a brief introduction on this manual for new and small entrepreneurs.

Chapter 2 discusses entrepreneurship. Besides an explanation of what is meant by the term "company", entrepreneurship for tax purposes will be addressed, followed by a step-by-step plan on how to start a business. Chapter 2 is concluded with an overview of the different legal ways to set up a company.

Chapter 3 discusses the Kamer van Koophandel (Chamber of Commerce). It describes the Handelsregister (Trade Register), certain activities of the Kamer van Koophandel (Chamber of Commerce) and the procedures which must be followed to register natural (physical) persons and legal persons with the Kamer van Koophandel (Chamber of Commerce).

Chapter 4 discusses taxes. First of all the registration of a business with the Inspectie der Belastingen (Internal Revenue Service) is described, followed by the most important aspects of turnover tax (omzetbelasting). Amongst other things, chapter 4 explains the terms "delivery of goods" and "rendering of services", the various turnover tax exemptions, turnover tax in relation to the import of goods, the various administrative obligations, how to submit and pay the turnover tax return and the special regulations for small entrepreneurs (RKO regulation).

After discussing turnover tax, the most important aspects of profits tax will be reviewed. Chapter 4 describes the term "profits tax", the obligation to pay profits tax as well as the terms "commercial annual accounts" versus "annual accounts for tax purposes". Finally, a closer look is taken at some specific provisions in the rules and regulations on profits tax.

After profits tax, there is a brief discussion on income tax. With respect to income tax the following questions are answered: who must pay income tax and when is the income tax due?

The final tax type described in chapter 4 is payroll tax. It starts with a discussion on personnel (employees), followed by the administrative obligations with respect to payroll tax and an explanation of the terms "wages" and "expense allowances". The paragraphs on payroll tax are concluded with an explanation of the ultimate responsibility for the payment of payroll tax and social premiums (ketenaansprakelijkheid).

Furthermore, chapter 4 contains six paragraphs on the following subjects: the importance of keeping the books of the business, the deductibility of costs, the difference between investments and purchases (including depreciation), car costs and private use of a company car, the rules with respect to objection and appeal and finally, administrative fines.

Chapter 5 describes the activities of Stichting Belastingaccountantsbureau. It also gives a short outline of the different types of audits and the way a tax audit is conducted.

Chapter 6 describes social insurances. After a general explanation on social insurances, the registration with the Sociale Verzekeringsbank (SVB) is discussed. This is followed by an explanation of the Antillean social insurances and employee insurance schemes. The chapter is concluded with a short description of the so-called Cessantia regulation.

Chapter 7 discusses the Dienst voor Arbeidszorg (Labor Services). The most important questions answered in chapter 7 are: what are the tasks of the Dienst voor Arbeidszorg (Labor Services), who is

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