How taxation amendments benefits Curacao eGaming investors
As one of the first countries that offered gaming license, Curacao has become the most popular destination that international investors choose to set up their online gaming structure.
The E-gaming business in Curacao are usually incorporated as an “e-Zone” company to hold the license and benefit from 2% profit tax rate.
However, since June 2018, Curacao government has decided to abolish the 2% tax rate and change the tax legislation in order to comply with OECD and EU standards. The amended legislation has been presented to and passed by the Curacao Parliament at the end of 2019 and came into force from the beginning of 2020.
How will the changes affect a Curacao eGaming company?
Profit tax rate of 22% and territorial tax basis.
Since 1st January 2020, all Curacao company will be subject to a 22% profit tax rate on its worldwide incomes, both domestic and foreign incomes. However, the amended legislation also changed the global tax basis to a territorial tax basis, which means only domestic profit of the company will be taxable. Income from a foreign permanent establishment will not be considered as taxable income.
Curacao licensed E-Gaming companies are not allowed to provide gaming services in Curacao local markets, which means most of their income shall be foreign source income that qualified for the territorial exemption.
To determine whether income is considered domestic or foreign, the profit before indirect cost is allocated based on direct foreign and direct domestic expenses. Any profit considered domestic is then taxed at 22%.
Substance requirements for eGaming companies
As of 1st January 2020, E-Gaming companies receiving foreign sources income are required to have certain level of substance in Curacao to qualify as the non-domestic income.
According to the Ministerial Decree regulation, an eGaming company need to satisfy the following substance reuqirements:
- Have at least one Curacao resident/established statutory director.
- The local resident director is equipped with professional knowledge to perform their duties.
- Direct or indirect employ people to execute and register the company transactions.
- Management and control decisions are taken in Curacao.
- The bookkeeping is done in Curacao.
- The company is incorporated at a Curacao address.
- The equity of the company matches with its functions and the relevant assets and risks level.
Our team has helped international investors to establish their Curacao eGaming structure and dedicated to assist in meet the substance requirements. Contact us now to find out more details.