SIGNIFICANT DEVELOPMENTS
New Fiscal Framework/ On December 29,1999, the Netherlands Antilles approved three tax bills, which are known as the New Fiscal Framework (NFF), published under P.B.244, 245, and 246.
The principal reasons for the enactment of the NFF are:
The objective of the Government of the Netherlands Antilles to part from its tax-haven image and to revitalize its financial services industry. In
order to part from its tax-haven image, the offshore legislation, which is laid down in articles 8A, 8B, 14, and 14A of the Profit Tax Ordinance 1940 (PTO 1940) and the 1979 and 1993 Guarantee Ordinance on Profit Tax (GOP), needed to be retired.The most important features of the NFF are:
·Abolition of the offshore regime: The distinction between offshore taxpayers and onshore taxpayers was in principle abolished as of January 1,2000. The NFF provides for a 34.5% flat rate (consisting of a 30%, profit tax rate and 15% island surtax), which is applicable to all taxpayers. However, except for the grandfathering rules (see hereafter) and the
introduction of the flat profit tax rate, the provisions of the NFF would only become applicable for financial years that start on or after a date that would be announced I a separate ordinance. The NFF is complimentary
to the TAK, and would be introduced simultaneously.
·Transitional legislation: The NFF provides for a transitional legislation granting the advantages of the present offshore regime to qualifying offshore companies incorporated before January 1,2000, provided certain conditions are met. These companies can benefit from the present offshore regime until the year 2009 or 2019.
The elements of the NFF which would become applicable for financial years that start on or after a date that would be announced in a separate ordinance are:
1.In the Profit Tax Ordinance;
·Introduction of a Tax Exempt Company (NABV), that is, company that is exempt from both the corporate income tax and the new dividend withholding tax.
· Introduction of a participation exemption.
·Extension of the period for loss carryforward
·Introduction of merger provisions.
·Introduction of a fiscal unity treatment (consolidated tax group).
2.Introduction of a Dividend Withholding tax.
Reintroduction of the offshore regime/Because negotiations between the Governments for a new TAK were pending, the Government of the Netherlands Antilles decided to temporarily reintroduce the pre-200 offshore regime.On July 27,2000 the Parliament of the Netherlands Antilles adopted a Bill granting temporarily extraordinary authority to the Government of the
Netherlands Antilles with the intention to implement legislation with precedence (the so-called Empowerment Act).
By virtue of this Empowerment Act, the Minister of Finance promulgated a Ministerial Decree by which the offshore regime, which was repealed as of January 1,2000, was reintroduced.
Furthermore, it can be derived from a letter of the Minister of Finance that it is the intention of the Government of the Netherlands Antilles to grant the offshore tax treatment until the year 2019 also for qualifying companies incorporated after December 31, 1999. On the basis of this letter, it is intended that such companies can obtain continued application of the offshore status after the new entry into force of the NFF if they meet the conditions of the transitional legislation rules within 12 months after the date of this legislation coming into force.Fiscal Status as per January 1,2001/ The representative of the Netherlands Antilles Ministry of Finance and the Netherlands Ministry of Finance have reached agreement in respect of the proposed amendment in respect of the
TAK and the NFF.The most important issues are:
·The NFF will become effective as of January 1,2001;
·For the time being, the proposed Netherlands Antilles dividend withholding tax of 10%, will not enter into force;
·The dividend article in the current TAK will be amended (see
“Tax treaties”).
Turnover tax/ A new turnover tax will be introduced this year. It is believed that this Turnover tax will enter into force as of April 2001.E-zone legislation/As of March 1,2001 the e-zone legislation will enter into force. The main purpose of the e-zone legislation is to expand and strengthen the economic position of the Netherlands Antilles. The e-zone legislation
provides potential (e-commerce) investors a variety of (tax saving ) opportunities.
TAXES ON CORPORATE INCOME
General/Resident corporations are taxed on worldwide income. Nonresident companies are taxed on the following Antillean-source income:
1.Income attributable to a permanent establishment.
2.Income from real property situated in the Netherlands Antilles.3.Interest on loans secured by a mortgage on property situated in the Netherlands Antilles.Onshore com
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