| Netherlands
Antilles Executive Summary
The Netherlands Antilles consist of five islands
between Venezuela and Cuba; they form part of
the Kingdom of the Netherlands.
However,
a constitutional crisis which erupted in 2004
owing to irreconcilable differences between the
constituent islands, 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 was expected to begin
in July 2007, and it is the aim of the agreement
to dissolve the Netherlands Antilles by 15th December,
2008.
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, the largest island.
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). There is a well-connected
airport on Curacao; flight time to Miami being
about one hour. Curacao has a good port, and is
part of the Dutch ship registry.
The
Antillean 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 Curacao was
shut for a while but is now partially open again,
mostly for trans-shipment. GDP per head at USD16,000
(2004 est.) is reasonable for the Caribbean area
as a whole, but unemployment is high. The Government
runs a large deficit and has had talks with the
IMF.
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 comnanies
are the main offshore sectors. The tax burden
on most offshore activities is light but not minimal.
The
Netherlands Antilles 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 an agreement
on the taxation of savings with the United Kingdom,
and is in discussions with several other countries,
including Barbados and Trinidad and Tobago, Sweden,
Iceland, Denmark, Greenland, Finland, the Faroe
Islands, Spain, Canada and Mexico, among others.
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
have 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 is has supplanted the
offshore NV for many purposes.
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