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Caribbean Netherlands - Indirect Tax Guide

Caribbean Netherlands - Indirect Tax Guide

Explore the requirements and rules that apply to Indirect Taxes in Caribbean Netherlands.

Explore the requirements and rules that apply to Indirect Taxes in Caribbean Netherlands.

Cruise at Willemstad colourful houses near lake

General

Types of indirect taxes (VAT/GST and other indirect taxes).

General expenditure tax.

Are there other indirect taxes?

  • Real estate transfer tax.
  • Excise taxes.
  • Insurance tax as part of the General expenditure tax.

What supplies are subject to VAT?

The Caribbean Netherlands General expenditure tax (Algemene bestedingsbelasting or ABB) is comparable with a sales tax.

Caribbean Netherlands ABB will in general be due on the supply of produced goods by manufacturers, the rendering of services and the importation of goods. The tax base is in principle the remuneration.

What are the standard or other rates (i.e. reduced rate) for VAT/GST and other indirect taxes?

Sales tax: 8 percent for the supply of produced goods by manufactures in Bonaire or 6 percent in Saba and Sint Eustatius.

Insurance: 7 percent in Bonaire and 5 percent in Saba and Sint Eustatius.

Services: 6 percent for the supply of services in Bonaire or 4 percent in Saba and Sint Eustatius.

Cars: 25 percent in Bonaire and in Saba and Sint Eustatius; there is a progressive tax rate which differs depending on whether it’s a used or new car.

Real estate transfer tax: 5 percent.

Who is required to register for transfer tax?

None of the parties. The amount of real estate transfer tax due is collected by the public notary and paid by the public notary to the tax collector. The purchaser of the real estate carries the tax burden.

VAT/GST registration

Who is required to register for VAT/GST and other indirect taxes?

Entrepreneurs carrying out a business, provided they are collecting revenues from the sale of certain produced goods or the rendering of services in the Caribbean Netherlands. If ready-made products are sold or resold, no taxable supply takes place for the ABB.

Upon request, entrepreneurs may be exempt from General expenditure tax provided that the turnover in the preceding year is less than 20,000 US dollars (USD). This applies only if certain conditions are met and differs for private persons and legal entities.

Is voluntary registration for VAT/GST and other indirect taxes possible for an overseas company (e.g. if the annual turnover is below the relevant VAT/GST and other indirect taxes registration threshold)?

No, based on the applicable legislation, overseas companies may only register for sales tax purposes in cases where the company is subject to sales tax in the Caribbean Netherlands.

Are there any simplifications that could avoid the need for an overseas company to register for VAT?

No.

Does an overseas company need to appoint a fiscal representative?

No.

Which forms and supporting documentation does an overseas company need to submit for VAT/GST and other indirect tax registrations?

A formal request is required to include general information in the respective form:

  • incorporation documents of the legal entity
  • identification of directors and officers of the legal entity; information concerning the address of the entity within the Caribbean Netherlands
  • business activity
  • extract from Chamber of Commerce
  • registration as an employer

Is grouping* for VAT/GST and other indirect taxes possible?

No.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

Quarterly.

What are the exchange rate rules in your country?

Each year, the tax authorities publish an overview of the average exchange rate of 1 year regarding several foreign currencies. However, the taxpayer is also allowed to use the exchange rate of the payment/receipt date. The USD is linked to the Euro.

International Supplies of Goods and Services

Exports – Goods

How are exports of goods treated?

Exports of produced goods by a manufacturer are subject to the General expenditure tax. A zero rate however applies.

Exports – Services

How are exports of services treated for VAT/GST purposes?

Export of services enjoyed abroad are in principle not subjected to general expenditure tax but this should be determined on a case-by-case basis.

Imports – Goods

How are goods dealt with on importation?

When goods are imported into the Caribbean Netherlands, import General expenditure tax and nil customs duties must be paid before the goods are released from customs’ control. In addition, excise taxes are levied on certain products depending on which island it concerns (Bonaire, Saba or Sint Eustatius).

Furthermore, exemptions may apply such as supplies of certain goods to be used by a manufacturer or certain goods for basic necessities of life.

Imports – Services

How are services brought in from abroad treated for VAT purposes?

Services from abroad are taxable. If services are rendered to a local entrepreneur and if General expenditure should be due in this scenario, a reverse-charge mechanism will in principle apply and the local entrepreneur becomes liable for General expenditure tax in connection with the services rendered by the foreign entrepreneur.

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

No.

Are there any exemptions with the right to recover or deduct input VAT?

No.

Are there any restrictions to the deduction of input VAT?

Only manufacturers that produce goods under certain conditions have a right to deduct input General expenditure tax by other manufacturers or by importation of the goods.

There is no right to deduct input ABB when it concerns supplies of services provided.

Tax points

When is VAT/GST due on a supply of goods or services?

The returns are submitted quarterly and by the fifteenth day of that quarter.

Invoices

Is a business required to issue tax invoices?

No. Only if it concerns a manufacturer of produced goods and only upon the request of the customer.

Is it possible/mandatory to issue invoices electronically?

Yes, it is possible but not mandatory.

Is it possible for the vendor to issue an invoice (i.e. self-billing)?

No.

Record-Keeping Requirements

How long must records and invoices be retained?

The books, accounting registry and invoices shall be stored for a period of 7 years.

Can the invoices be stored abroad?

Yes.

Audits

Do tax audits take place on a regular basis?

Yes, approximately every 5 years.

Are audits done electronically in your country (e-audit)? If so, what system is in use?

No but possibly in the future.

What penalties can arise from non-compliance?

There are two different types of penalties. The first type is a default penalty and applies when:

  • the tax return is not filed or not filed on time (maximum penalty of USD1,400)
  • the tax due is (wholly or partially) not paid within the specified period (maximum penalty of USD5,600)

The second type is an offense penalty and applies when tax is not fully paid in time due to deliberate intent or gross negligence of the taxpayer. The maximum penalty is then 100 percent of the tax due.

Special Indirect tax rules

Are there any special rules for the sale of a company by one taxpayer to another where VAT is not due on the sale?

Yes, an exemption may under some circumstances be applicable.

Are there unique specific indirect tax rules that you would not expect to find in ‘standard’ VAT jurisdictions?

In general, there is a right only for entrepreneurs that are manufacturers of produced goods to claim deduction of General expenditure tax paid. There is no right to deduct input VAT where it concerns rendered services or when the entrepreneur is a service provider.

Does a reverse-charge mechanism apply for goods or services?

Yes.

Are there indirect tax incentives available (e.g. reduced rates, tax holidays)?

Yes, the law contains a number of exemptions.

Rulings

Are rulings and decisions issued by the tax authorities publicly available?

No.

Footnotes

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

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