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Caribbean shipping industry: international investors can benefit from Tonnage Tax regimes

  • December 2022

In recent years, Curaçao has been attracting more attention from global corporates focused on shipping businesses.

Part of the Kingdom of The Netherlands and united under its Constitution, this stunning Caribbean Island – with one of the largest deep-water harbors and dry-docks in the Americas – is home to registered vessels which not only carry the Dutch red, white and blue flag, but are also considered to be of Dutch Nationality.

The registration process of these vessels is predominantly divided into two steps. The Ownership Registration takes place at the Ship Registry of the Cadaster Office and is regulated under private law, while the Flag Registration takes place under the Maritime Authorities of Curaçao (MAC) office, as a matter of public law.

The Tonnage Tax Regime

Curaçao has operated with a tonnage tax regime since January 1st, 2007 and this can offer companies a number of tax advantages.

Under the regime, the taxable income for each tax year is based on the net tonnage per qualifying sea vessel, multiplied by a fixed amount based on a sliding scale.

The regime applies to companies utilizing or renting qualifying sea vessels, managing qualifying ones on behalf of third parties, or chartering those out.

Companies that qualify may opt to pay Tonnage Tax instead of paying corporate income tax under the general rules.

Does Tonnage Tax apply to your business?

The sea has always been an interesting market, but corporations may not be aware about whether they can qualify for the Tonnage Tax regime or not.

As experts in entity life cycle management, Citco Corporate Solutions has extensive experience in supporting corporations worldwide, including in the area of vessel registration in Curaçao and other jurisdictions.

To discuss your options and requirements on this or any other topic related to entity management, please contact Rhona Mendez at RMendez@citco.com.

By Rhona Mendez, Trust Product Manager, Curaçao International Trust Company B.V.

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