Tax System Bonaire

Tax system Bonaire

The following taxes are the most relevant for you as an individual and your business on Bonaire.

• Income tax and wage tax
• Real estate tax
• Revenue tax
• Expenditure tax
• Tourist tax

There is no profit tax on Bonaire.

1.  Income tax and wage tax

Income from employment or business (sole proprietorship), interest, dividends and pension are amongst others taxable with income tax, if enjoyed by a natural person resident of Bonaire or receiving source income from Bonaire. Certain expenses are deductible from this income (depending on the type of income). Additionally, the interest paid on a mortgage for the principal residence, certain life insurance premiums and donations to charities are deductible.

Any entrepreneur who chooses not to incorporate an entity for his/her business will incur taxable income for income tax purposes, whereas income generated by entities is not taxed since there is no profit tax on Bonaire. Furthermore, on any wages paid to employees, wage tax should be withheld. An employee is a natural person who has an employment relationship with a withholding agent or who receives wage from former employment from him/herself or someone else (pension). One of the main characteristics of an employment for tax purposes is the existence of a relationship of authority between the employer and employee. Anyone working for an entity in which they participate for at least 5% of the shares or profit shares (substantial interest), is deemed to be working in an employment relationship with this entity. In this case the wage tax legislation provides for a minimum income per year. The wage tax that is withheld can be offset with the income tax that is due.

2. Real estate tax (in Dutch: ‘Vastgoedbelasting’)

Real estate tax is yearly levied on the first day of January on benefits from real estate on Bonaire from the owner of the real estate. The real estate tax is calculated by imposing a deemed income of 4% on the value of the real estate. The general tax rate is a fixed rate of 17.5% on this deemed income of 4%. A lower tax rate of 10% on the deemed income applies for real estate defined as a hotel that is not owned by private persons.

Real estate is valued by the tax authorities every 5 years (current period 2021-2025). However, in the event of a change to the real estate through construction, renovation, improvement, demolition or destruction in the year preceding or during the 5-year period, the tax authorities will re-determine the value of the real estate. Note that there is a temporary exemption of real estate tax for the first 10 years in which an increase in the value of real estate occurs, which results from the construction, renovation, improvement, extension or renovation of the property. The real estate tax also has certain exemptions. The most important exemptions are a principal residence, provided that the owner is a resident of Bonaire and real estate part of the business assets of a natural person.

In the case that the valuation of the real estate is incorrect for real estate tax purposes, it is possible to file an objection against the valuation (‘in Dutch waardebeschikking’) within 2 months after the date of the receipt of valuation from the tax authorities. Filing an objection against this receipt is only possible in the first year of every 5-year period.

3. Revenue tax (in Dutch: ‘Opbrengstbelasting’)

Revenue tax is levied from those who have shares (directly or indirectly) in an incorporated entity that is established on Bonaire or are entitled to its earnings in any other way. An entity that is incorporated on Bonaire is deemed to be domiciled in the Netherlands for revenue tax purposes. The profits of this entity will therefore, in principle, be subject to profit tax and dividend withholding tax in the Netherlands. An entity can obtain an establishment permit (in Dutch: ‘vestigingsplaatsbeschikking’) from the tax authorities that it is, in fact, domiciled on Bonaire if the entity fulfils the conditions. The conditions entail that the entity has enough physical “substance” on Bonaire. If an entity obtains an establishment permit and is considered domiciled on Bonaire, its profits will be subject to taxation in Bonaire. Revenue tax will be levied on profit distributions by the entity to the (indirect) shareholders/natural person against a fixed rate of 5% in the case that the shareholder/natural person is a resident of Bonaire for tax purposes. Distributions by an entity domiciled on Bonaire to another entity domiciled on Bonaire (with an establishment permit) are exempt from revenue tax in case of a participating interest.

4. Expenditure tax (in Dutch: ‘Algemene bestedingsbelasting’)

On Bonaire, expenditure tax (ABB) is levied on the supply of goods by producers, delivery of services by entrepreneurs and importation of goods. A producer for expenditure tax purposes is any entrepreneur who produces goods using raw materials or semi-finished products. Entities 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. For the last-mentioned entities, the expenditure tax is assumed to be paid at import.

The general tax rate of expenditure tax on the supply of goods is 8%. The tax rate of expenditure tax for the rendering of services is 6%. Some exemptions apply for specific supplies of goods and services. One of the difficulties arising from the levy of expenditure tax is when entrepreneurs provide a combination of a supply of goods and services. If the goods (8% or not taxable if provided by a retailer) and services (6%) are provided as a combined supply, entrepreneurs need to ensure the right amount of expenditure tax is calculated on the total price. If for example a retailer sells a new battery for a car for a total price of USD 110 which includes the installation of the battery, only the service part of the supply is taxable with 6% expenditure tax. The sale of the battery is not taxable with expenditure tax. The entrepreneur needs to determine which part of the total price relates to service and is taxable with 6% expenditure tax.

Producers have the right to deduct the expenditure tax paid when:

• buying goods from another producer and using these to manufacture goods themselves;
• importing goods which will be used to manufacture goods themselves.

Expenditure tax in the construction sector

Previously the (sub)contractor providing construction services would generally not be able to deduct expenditure tax paid. The (sub)contractor rendered a service for which the right of deduction did not apply. Based on the Decree of the State Secretary of Finance of September 23, 2011, the following applies. Entrepreneurs in the construction sector are (also) regarded as producers if they carry out actual construction work on behalf of a client, if real estate is constructed. The result is that expenditure tax is due on the received contract sum by the contractor and the contractor will also be entitled to deduct the expenditure tax paid for the material used to construct on the condition it is delivered by another producer.

Expenditure tax on import

Expenditure tax is due on the import of goods on the customs value. The customs value includes taxes, levies and dues, but not the expenditure tax itself. Also, costs related to insurance, packaging and transportation are included. On Bonaire the rate of expenditure tax on import is 8%. In principle, a rate of 25% applies on cars. However, in case the car produces no carbon dioxide a rate of 0% can apply.

5. Tourist tax

Tourist tax on Bonaire is levied on the visitor, prior to or at the moment of arrival on Bonaire. The tourist tax can be paid via an online portal and the proof of payment can be shown at arrival. The following rates apply.

• USD 75 for visitors of 13 years old and older (residents of Bonaire, crew members of ships and transit passengers are exempt and do not pay tourist tax).
• USD 10 for residents of Aruba, Curaçao, Saba, Sint Eustatius and Sint Maarten, visitors of 12 years old and younger and visitors from cruise ships.
• USD 0 for students of Bonaire that study abroad and receive an allowance or loan based on the study financing law (Wet studiefinanciering BES).

Contact us

Our Bonaire team is ready to support you. In case of any further questions, please contact the following advisors.

• Jourainne Wever - jourainne.wever@aw.gt.com - Director Tax
• Lance Henriquez - lance.henriquez@aw.gt.com - Manager Tax
• Melina Rangel - melina.rangel@aw.gt.com - Manager Tax