| Status | Enacted Law |
| Law | Global Minimum Tax Ordinance published on December 27, 2024 |
| Effective Date | Accounting periods beginning on or after December 31, 2024 |
| IIR | Yes (2025) |
| UTPR | No |
| QDMTT | Yes (2025) |
| Filing Deadlines | Standard |
| Safe Harbours | Yes – Transitional CbCR Safe Harbour, QDMTT Safe Harbour and the Simplified Calculations Safe Harbour |
On December 20, 2024, Curacao’s Global Minimum Tax Ordinance was approved by Parliament and it was published on December 27, 2024. This includes an IIR and a QDMTT from January 1, 2025:
On November 1 and 4, 2024, the Council of Ministers sent the draft National Ordinance on Minimum Tax to the SER (case number 2024/ 012811) and RVA (case number RA/37-24-LV) for review.
OVERVIEW
On December 20, 2024, Curacao’s Global Minimum Tax Ordinance (‘the Law’) was approved by Parliament and it was subsequently published on December 27, 2024.
The Law includes an Income Inclusion Rule (IIR) and a domestic minimum tax (intended to be a Qualified Domestic Minimum Top-Up Tax) from December 31, 2024. The Under-Taxed Profits Rule is not included in the Law.
Curacao’s approach is to implement the global minimum tax provisions as a separate tax law with a redraft of the provisions of the OECD Model Rules, as opposed to directly transposing the OECD Model Rules into domestic law.
GLOBE APPLICATION
General
As expected, the Law closely follows the OECD Model Rules, however, it does not reflect most aspects of the OECD Administrative Guidance (either the February 2023, July 2023, December 2023 or June 2024 guidance issued). A number of provisions in the Law are subject to additional Decrees or rules to provide further detail on the implementation of various aspects.
The Transitional CbCR Safe Harbour, QDMTT Safe Harbour and the Simplified Calculations Safe Harbours are provided in the Law, however, the latter is subject to a further detailed implementation decree.
Administrative Guidance
The Law does not include many aspects of the OECD Administrative Guidance.
The only aspects of the First Set of OECD Administrative Guidance included in the Law are:
-Deemed consolidation test (Article 1.4);
-Sovereign wealth funds and the definition of Ultimate Parent Entity (Article 1.4);
-Meaning of ancillary for Non-Profit Organisations (Article 1.6);
-Excluded Equity Gains or Loss and hedges of investments in foreign operations (Article 2.2);
-Debt release Election (Article 2.4);
-Excess negative tax carry-forward guidance (Article 2.7) – Subject to a Specific Decree;
-Equity Gain or loss inclusion election (Article 2.9) – Subject to a Specific Decree;
-Blended CFC Regimes (Article 2.10) – Subject to a Specific Decree;
-Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity (Article 3.2);
-Portfolio shareholdings election (Article 3.5).
No aspects of the Second, Third or Fourth Set of OECD Administrative Guidance are included in the Law.
Safe Harbour and Penalty Relief Guidance
Article 8.8 the Law includes the Transitional CbCR Safe Harbour based on the OECD provisions outlined in its Safe Harbours and Penalty Relief Guidance.
The changes provided in the December 2023 OECD Administrative Guidance (eg for hybrid arbitrage arrangements) are not included.
Article 8.11 of the Law includes the Simplified Calculations for NMCEs – subject to further rules to be issued.
Article 8.2(9) provides for a high-level QDMTT Safe Harbour.
ELECTIONS
Elections in the OECD Model Rules
All of the elections included in the OECD Model Rules are provided in the Law, including:
-Excluded Entity Election (Article 2.2(4) of the Law)
-Stock-Based Compensation Election (Article 6.3 of the Law)
-Election to use the Realization Method (Article 6.6 of the Law)
-Election to Spread Capital Gains (Article 6.7 of the Law)
-Consolidation Election (Article 6.9 of the Law)
-Unclaimed Accrual Election (Article 7.3(9) of the Law)
-GloBE Loss Election (Article 7.4 of the Law)
-Prior Year Adjustment Election (Article 7.6 of the Law)
-De-minimis Election (Article 8.7 of the Law)
-Substance-Based Income Exclusion Election (Article 8.2 of the Law)
-Taxable distribution Election (Article 10.6 of the Law)
-Tax Transparency Election (Article 10.5 of the Law)
-Distribution Tax Regime Election (Article 10.3 of the Law).
Elections in the Administrative Guidance
The Law includes the:
-Excess Negative Tax Carry-Forward Election (Rules to be issued in a Decree)
-Portfolio Shareholdings Election (Article 6.2(5) of the Law)
-Debt Release Election (Article 6.2(2) of the Law)
-Foreign Exchange Hedge Election (Article 6.2(2) of the Law).
DEVIATIONS FROM THE OECD MODEL RULES/EU GLOBAL MINIMUM TAX DIRECTIVE
Whilst the Law implements the OECD Model Rules, it does not currently include many aspects of the OECD Administrative Guidance issued to date. Similarly some of the Administrative Guidance that is included in the Law is included only on a high-level basis and is subject to further Decrees (eg the provisions for Blended CFC Regimes and Excess Negative Tax).
The law does not include any provisions for the UTPR.
DOMESTIC MINIMUM TAX
General
Chapter III of the Law provides that Curacao will apply a domestic minimum top-up tax (DMTT) (intended to be a QDMTT) for financial years beginning on or after December 31, 2024.
QDMTT Design Features
Article 3.1 of the Law provides that the DMTT will be levied on:
-the parent entity established in Curaçao whose interest is not directly or indirectly held by another parent entity established in Curaçao; or
-if there are multiple parent entities established in Curaçao or there are other group entities established in Curaçao, a group entity established in Curaçao will be designated for DMTT filing and payment that purpose by the group or the Tax Authority.
Under Article 3.2 of the Law, the DMTT can be calculated using an accepted financial reporting standard or an authorized financial reporting standard instead of the financial reporting standard used in preparing the consolidated financial statements of the UPE.
Tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules must be excluded, as provided in the OECD Administrative Guidance. The OECD Administrative Guidance also restricts the push-down to hybrid entities and for taxes on distributions (aside from domestic withholding tax on distributions).
This preserves Curacao’s primary right to tax income accruing to a Curacao member entity which is also a CFC. If there were no statutory derogation from the general GloBE rules for the calculation of the domestic minimum tax, and the CFC tax paid by the controlling company abroad were included in the included taxes of the Curacao CFC, the effective tax rate would be increased. Therefore, excluding the CFC tax from the Curacao CFCs covered taxes allows Curacao to tax low-taxed income at a higher rate than would be the case under an IIR.
Article 7.5(9) of the Law provides that further Rules will be issued to restrict the allocation of taxes to PEs and CFCs for DMTT purposes.
Article 14.2 of the Law applies the international activity exemption for DMTT purposes.
Registration
Not provided in the Law.
Filing
The relevant aspects of the submission of a GloBE Information Return (GIR) are included, as provided in the OECD Model Rules.
The proposed approach is that every Constituent Entity located in Curacao will have an obligation to file a GIR in Curacao. However, this obligation can be discharged if the GIR is filed by:
-The Ultimate Parent Entity, or
-The Designated Filing Entity.
Where the GIR is being filed by either the Ultimate Parent Entity or the Designated Filing Entity, the Constituent Entity, must file a notification with the Tax Authority.
The notification must contain:
-Details of the entity that is filing the GIR, and
-The jurisdiction in which such an entity is located.
Where the GIR is filed by the Designated Local Entity it needs to outline the Constituent Entities that it is filing on behalf of.
Both the GIR and associated notifications must be filed no later than 15 months after the end of the fiscal year (with an 18-month deadline for the Transition Year).
Article 11.1(2) of the Law requires that a Top-Up Tax Return must be filed within 17 months (20 months for the transitional year) after the end of the tax period.
Payment
Article 11.1(3) of the Law requires that Top-Up Tax must be paid within 17 months (20 months for the transitional year) after the end of the tax period.
Penalties
Article 12.2(1) of the Law provides that failure to file a top-up tax return will be subject to an Administrative Fine under the General Tax Ordinance.
None Issued
| Curacao | |||
|---|---|---|---|
| Effective Date: | |||
| First Set of OECD Administrative Guidance | |||
| 1.1 | Rebasing monetary thresholds in the GloBE Rules | ||
| 1.2 | Deemed consolidation test | 1.2 – excludes state entities | |
| 1.3 | Consolidated deferred tax amounts | ||
| 1.4 | Sovereign wealth funds and the definition of Ultimate Parent Entity | 1.2(6) | |
| 1.5 | Clarifying the definition of ‘Excluded Entity’ | ||
| 1.6 | Meaning of ancillary for Non-Profit Organisations | 2.2(3) | |
| 2.1 | Intra-group transactions accounted at cost | ||
| 2.2 | Excluded Equity Gains or Loss and hedges of investments in foreign operations | 6.2 | |
| 2.3 | Excluded Dividends- Asymmetric treatment of dividends and distributions | ||
| 2.4 | Debt release Election | 6.2 | |
| 2.5 | Accrued Pension Expenses | ||
| 2.6 | Covered Taxes on deemed distributions | ||
| 2.7 | Excess Negative Tax Carry-forward guidance | Decree to be issued | |
| 2.8 | Substitute Loss carry forwards | ||
| 2.9 | Equity Gain or loss inclusion election | 6.2(3) – subject to rules | |
| 2.9 | Qualified Ownership Interest/Flow through entity | 6.2(3) – subject to rules | |
| 2.1 | Allocation of taxes arising under a Blended CFC Tax Regimes | Rules to be issued | |
| 3.1 | Application of Taxable Distribution Method Election to Insurance Investment Entities | ||
| 3.2 | Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity | 1.2 | |
| 3.3 | Restricted Tier 1 Capital | ||
| 3.4 | Liabilities related to Excluded Dividends and Excluded Equity Gain or Loss from securities held on behalf of policyholders | ||
| 3.5 | Simplification for Short-term Portfolio Shareholdings | 6.2 | |
| 3.6 | Application of Tax transparency election to Mutual insurance companies | ||
| 4.1 | Deferred tax assets with respect to tax credits under Article 9.1.1 | ||
| 4.2 | Applicability of Article 9.1.3 to transactions similar to asset transfers | ||
| 4.3 | Asset carrying value and deferred taxes under 9.1.3 | ||
| Second Set of OECD Administrative Guidance | |||
| 1 | Currency conversion rules | ||
| 2 | MTTCs | ||
| 3 | SBIE Rules | ||
| – Foreign rules | |||
| Stock-based compensation election | |||
| Leases | |||
| – Impairment losses inc in tangible asset value | |||
| 4.1 | QDMTT Safe Harbour | 8.2(9) – High level | |
| 4.2 | UTPR Safe Harbour | ||
| Third Set of OECD Administrative Guidance | |||
| 1 | Transitional CbCR – Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) | ||
| 2.2.1 | Transitional CbCR – JVs | ||
| 2.3.1 | Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting | ||
| 2.3.2 | Transitional CbCR – Using different accounting standards | ||
| 2.3.3 | Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches | ||
| 2.3.4 | Transitional CbCR – MNEs not required to file CbC Reports | ||
| 2.3.5 | Transitional CbCR – Qualified Financial Statements for PEs | ||
| 2.4.2 | Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities | ||
| 2.6 | Transitional CbCR – Treatment of hybrid arbitrage arrangements | ||
| 3.1 | Identifying Consolidated Revenue | ||
| 3.2 | Mismatch between Fiscal Years of the UPE and another Constituent Entity | ||
| 3.3 | Mismatch between Fiscal Year and Tax Year of Constituent Entity | ||
| 4.2.1 | Blended CFCs -multiple GloBE Jurisdictional ETRs | ||
| 4.2.2 | Blended CFCs – not required to calculate an ETR | ||
| 4.2.3 | Blended CFCs – income of non-GloBE Entities | ||
| 5.3 | 30 June 2026 Filing deadline | ||
| 6 | NMCE Simplified Calcs | ||
| Fourth Set of OECD Administrative Guidance | |||
| 1.2.1 | Aggregate DTL Category basis | ||
| 1.2.1 | Exclusion of certain types of GL accounts and separate tracking | ||
| 1.2.1 | Exclusion of GL accounts that generate standalone DTAs | ||
| 1.2.1 | Exclusion of swinging accounts and separate tracking | ||
| 1.2.2 | FIFO/LIFO Basis | ||
| 1.2.3 | Aggregation of Short-term DTLs | ||
| 1.2.2 | Reversal of DTLs that accrued before the Transition Year | ||
| 1.2.2 | 5 year unclaimed accrual election | ||
| 2.1.2 | Recalculated deferred tax where GloBE carrying value differs from accounting carrying value | ||
| 2.1.2 | GloBE and accounting carrying values and the Transition Rules | ||
| 2.1.2 | Additional provisions for Intragroup transactions accounted for at cost | ||
| 2.1.2 | Exclusion of GloBE carrying value from SBIE | ||
| 3.1.3 | General rules for allocating cross-border, current taxes under a cross-crediting corporate tax system: 4 Steps | ||
| 3.1.3 | Specific rules for foreign PEs/CFCs, Hybrids/rev hybrids with domestic source income | ||
| 3.1.3 | Cross-crediting between Permanent Establishments and distributions from foreign subsidiaries | ||
| 4.1 | Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and rev hybrids | ||
| 4.2 | Allocation of deferred tax expenses and benefits from a Parent Entity to a CFC, PE Hybrid or Rev Hybrid: 5 step process | ||
| 4.2.2 | Five-Year Election to exclude the allocation of all deferred tax expenses and benefits to CFCs, PEs, Hybrids and Rev Hybrids | ||
| 4.2.3 | Exclusion of deferred tax assets or liabilities arising under a Blended CFC regime from transition rules | ||
| 5.2.2 | Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity | ||
| 5.3.2 | Non-group owners: Partially owned Flow-through Entities | ||
| 5.3.5 | Non-group owners: Indirect minority ownership | ||
| 5.4.2 | Taxes allocated to a flow-through entity | ||
| 5.5.2 | Hybrid entities – Taxes pushed down include indirect owners | ||
| 5.5.4 | Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system | ||
| 5.6.2 | Extension of taxes pushed down to include Reverse Hybrids | ||
| 6.1.4 | Option to exclude a Securitization Entity from scope of QDMTT | ||
| 6.1.4 | Option to not impose top-up tax liabilities on SPVs used in securitization transactions | ||
| 6.1.4 | Amendments to the Switch-Off rule | ||
| 6.1.4 | New definition: Securitization Entity | ||
| 6.1.4 | New definition: Securitization Arrangement | ||
| January 2025 OECD Administrtive Guidance | |||
| 1 | Articles 8.1.4 and 8.1.5 | ||
| 1 | Amendments to CbCR Safe Harbour for 9.1 | ||
| 1 | Amendments to QDMTT Safe Harbour for 9.1 | ||
| 1 | Article 9.1 of the GloBE Rules | ||
| 1 | Central Record of Legislation with Transitional Qualified Status |
See domestic rules.
TO DO
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