|
Curaçao Executive Summary
A
constitutional crisis erupted in the Netherland
Antilles in 2004 owing to irreconcilable differences
between the constituent islands and led to a joint
Commission appointed by the Netherlands and the
local government concluding that the jurisdiction
should be broken up, with the islands of Curacao
and St Maarten becoming autonomous countries alongside
the Netherlands and the Caribbean island of Aruba,
whilst the remaining three islands - Saba, Bonaire
and St. Eustatius - should be brought under the
direct control of the Dutch government in The
Hague.
This
was approved by the Dutch cabinet in December
2004.
The
transition process towards the dismantling of
the Netherlands Antilles began in July 2007 and
the Netherlands
Antilles as a jurisdiction within the Kingdom
of the Netherlands was dissolved on October 10,
2010. Two new jurisdictions, Curacao and St. Maarten,
came into existence. The other three Islands,
Bonaire, Saba and St. Eustatius became Overseas
Municipalities of the Netherlands (OMON).
The Dutch monarch has remained as the head of
state and the Netherland continues to be responsible
for foreign affairs and defense. The citizens
of Curacao continue to be Dutch nationals.
Curacao lies
in the Southern part of the Caribbean, between
Venezuela and Cuba. The capital, Willemstad, is
the main financial centre and seat of Government.
The
legal, political and administrative systems are
largely modelled on Dutch originals, but there
has been some common law influence on the offshore
regime. Government, Judiciary and Central Bank
are established on Curacao. Dutch is the official
language, but English is often spoken; the local
language is Papamiento, a Creole dialect. The
local currency is the Netherlands Antillean guilder
(ANG) and there are plans to replace this with
the Dutch Caribbean Guilder from 2012. There is
a well-connected airport on Curaçao; flight
time to Miami being about one hour. Curaçao
has a good port, and is part of the Dutch ship
registry.
The
Curacao economy is very open and is highly dependent
on tourism and offshore financial services. Most
goods are imported since there are few natural
resources. The important refinery in Curaçao,
run by neighboring Venezuela's state oil company
PDVSA, was shut for a while but is now partially
open again, and used mostly for trans-shipment
to China. GDP per head at USD20,500 (2009 est.)
is reasonable for the Caribbean area as a whole,
but unemployment is high. The Government used
to run a large deficit, but has been planning
a balanced budget since 2009.
Local
taxes are quite high for residents, but there
is a well-developed offshore sector which originated
in World War Two as a haven for Dutch companies
fleeing the German occupation of the Netherlands.
Many financial links are to the Netherlands in
one direction and to South America in the other.
The financial and professional infrastructure
is well-developed, with a Dutch (civil law) cast.
Banking, mutual funds (for professional investors),
shipping, licensing, insurance and holding companies
are the main offshore sectors. The tax burden
on most offshore activities is light but not minimal.
The
Netherlands Antilles, and Curaçao by default,
has traditionally had tax treaties only with Norway
and, of course, the Netherlands, which gives access
to the many Dutch tax treaties and good withholding
tax regime. However, it is now seeking to create
a more extensive tax treaty network, and in addition
to a Tax Information Exchange Agreement currently
in the pipelines with the United States, has concluded
TIEAs with more than a dozen countries.
There
is no banking secrecy legislation as such, but
the jurisdiction does not normally respond to
requests for help on tax matters from other than
treaty partners. In fact, the Netherlands Antilles
had faced pressure from international bodies to
legislate more firmly against drug-related financial
transactions: the Antilles' geographical position
has led to a substantial illicit trade in drugs
and drug money through the jurisdiction. The authorities
are seen as being helpful to international investigators
of drug crime, but the Parliament has in the past
shown itself reluctant to put in place legislation
improving disclosure.
At
the end of 1999, Netherlands Antilles passed new
tax legislation known as The New Fiscal Framework
intended to improve the jurisdiction's image as
an Offshore Financial Centre and to revitalise
its financial services industry.
The
legislation, which came into force from 1st January
2002 along with a revised 'BRK' (Tax Arrangements
for the Dutch Kingdom), removed the distinction
between 'onshore' and 'offshore' companies and
simplified tax rates. However, existing offshore
companies are grandfathered until 2019. Alongside
the tax legislation, a new corporate form was
introduced to allow offshore operations on a tax-exempt
basis: this is the NABV (Netherlands Antilles
Besloten Vennootschap) or AEC in English (Antilles
Exempt Company), and it has supplanted the offshore
NV for many purposes.
BACK
TO TOP
|