However, that does not mean no taxes are imposed in Bonaire. Below we will summarize the most important taxes in Bonaire.
Revenue Tax
When doing business in Bonaire you should consider the Revenue Tax. The Revenue Tax is similar to the Dutch Dividend Withholding Tax. Revenue Tax is being levied from those who have an interest (direct or indirect) in the profits of shares in a company that is established in Bonaire.
A company that has been incorporated on Bonaire is viewed as a resident of the European part of the Netherlands for the purpose of Revenue Tax. The profits of this company will then be subject in the Netherlands to Corporate Income Tax and Dividend Withholding Tax. However, a company incorporated in Bonaire can obtain a ruling stating that the company is resident of Bonaire, to avoid having to pay Corporate Income Tax and Dividend Withholding Tax in the European part of the Netherlands. The Tax Authorities will assess whether the company complies with one of the following three conditions. The first condition may be that the company has a revenue of less than USD 80,000 and the value of the assets is less than USD 200,000 (small business condition). The second condition is that the total value of the assets consists for less than 50% of investments, cash (equivalents) and subsidiaries of which the proceeds are used for the benefit of persons living outside the BES islands (active company condition). The third condition is that the company provides employment to at least 3 people on the BES islands and has use of a property valued at USD 50,000 or more (local company condition). If the ruling is obtained, no taxes will be imposed on the actual profits (no profit tax applies on Bonaire), but Revenue Tax will be imposed on any distributions of profits to the (indirect) shareholders against a fixed rate of 5%.
Expenditure Tax and Tourist tax
A general expenditure tax (ABB) is levied on the supply of goods by producers, delivery of services by entrepreneurs and importation of goods. Companies selling goods from a retail establishment intended to be used mainly for the sale of goods to others than entrepreneurs, are not subject to the expenditure tax. The application of the ABB legislation is not clear in the situation that entrepreneurs provide a mix of supply of goods and services with different rates or a mix of taxable and not taxable supply of goods and services. If the goods (8% or not taxable if provided by a retail company) and services (6%) are provided as part of a package price, make sure to calculate the right amount of tax on the total price. Some exemptions apply for the ABB, for example the provision of hotel rooms and apartments which is subject to the Tourist Tax.
The Tourist Tax is levied on Bonaire on the provision of room to stay to anyone not resident in Bonaire. A room to stay is defined as an apartment, hotel or other room, if the establishment providing rooms provides rooms with hotel services to more than 4 people. The Tourist Tax on Bonaire is USD 5.45 per person per night.
Real Estate Tax and Ground Tax
Furthermore, Real Estate Tax is being levied on income from real estate from the owner of that real estate as per January 1 of any year. There are exemptions for the Real Estate Tax, for example, the main residence and certain government owned buildings and churches.
The tax is calculated on a deemed income of 4% on the market value of the property. The property is valued by the Tax Authorities every 5 years. The general tax rate is a fixed rate of 17.5% on the deemed income. There is a discounted rate of 10% for real estate defined as a hotel that is not owned by private persons. Furthermore, a 30% surcharge on the Real Estate Tax amount will be due.
When investing in property in Bonaire, make sure the value of the property for Real Estate Tax purposes is correct, especially since the possibility to object against a valuation only comes once every 5 years (the first year of the 5-year period).
Besides the Real Estate Tax, Bonaire also has a Ground Tax. In principle Ground Tax is being levied on the market value of the real estate that is used as the main residence. The tax is calculated as 0.345% on the value of the property.
If you would like to do business in Bonaire, please feel free to contact us at Grant Thornton Bonaire.