Curaçao: A Land of Opportunity

Curaçao has been a hub for international business for a very long time. It all started in the 1940s when the island developed its legislation to accommodate the formation and transfer of international companies to the island. Through tax treaties, Curaçao became a renowned financial jurisdiction and prospered for many decades.

TEXT PRISCILLA LOTMAN AND HELEN MILSOM

Herman Behr, founder of the HBM Group, stated, “Though the benefits of those tax treaties are now a dim memory, Curaçao has been able to continuously adapt itself to meet the demands of what it means to be an international financial jurisdiction.”

The Curaçao Chamber of Commerce and Industry (CoC) provides entrepreneurs with readily available information and support on how to establish a company and meet the requirements to do so. Additionally, businesses providing fiduciary services to international clients also assist with the formation of local and international structures, often referred to as International Business Companies (IBCs), and help obtain the required permits and licenses. This combination allows the growth of the island’s international financial sector, a key pillar of Curaçao’s economy.

The Financial Sector
In a world where Curaçao competes with jurisdictions such as the Cayman Islands, Singapore, Hong Kong, and Luxembourg, the island must remain pliable enough to continuously innovate and improve its core competencies, and at the same time remain true to its nature. This is not an easy balancing act; however, it is one which Curaçao has become accustomed to. “Post World War II, Curaçao was considered a tax haven, open to those looking to ‘profit shift’ and evade their taxes. This has changed significantly in the past years. Substance is now important and this is where we have to provide international business with additional incentives other than just a lower tax bill,” stated Behr.

“the island must remain pliable enough to continuously innovate and improve its core competencies, and at the same time remain true to its nature.”

The financial services sector on the island is used to servicing international clients while implementing strict compliance requirements enforced by local and international regulators. Policies are well structured and controlled. “Clients and investors can be assured of stability and have confidence that there are procedures in place which are governed by the local regulator: the Central Bank of Curaçao and St. Martin. Curaçao does not have a particular differentiating factor; what we have is a combination of elements that cumulate into a business environment investors and clients seek,” explained Behr. He added, “We are autonomous and thus able to develop our own tax culture, however, our connection with the Netherlands ensures a stable legislative system. This is our only truly unique feature as a financial jurisdiction and it is an aspect that investors appreciate. Business ethics is imperative here.”

The Economic and Free Zones
Developing areas to promote business activities is part of the larger economic plan for the island. Two of the incentives that have been developed are the Economic Zone (E-zone) and the free zones. They offer companies the opportunity of utilizing Curaçao’s infrastructure and legislative incentives, while contributing to the economic development. They are well regulated and need to comply with the policies and guidelines that are in place.

E-zone legislation provides e-commerce investors a variety of tax saving opportunities; E-zone businesses only pay 2% tax on profits if all conditions are met. “The E-zone facility is primarily an incentive policy to stimulate the local economy. Though the business activities take place abroad, the decision-making is done in Curaçao. Through E-zones, the goods usually do not reach the island but are transferred directly to the buyer. The advanced communication infrastructure we have on the island provides companies located here with an advantage to do e-business in the region and worldwide,” commented Behr.
Curaçao has two active free zones: one in the harbor and the other at the airport. Incentives make it very appealing for businesses to operate in the free zones of their choice. Goods imported into the free trade zone benefit from no import duties. At least 75% of those goods must be exported annually and the other 25% can be sold domestically after obtaining a government permit.

Connecting Markets
Despite the fact that Curaçao has historically always been a center of commerce and business between Europe and the Americas, the international financial sector has been operating independently, and has predominantly focused on assisting Dutch and US companies. Currently, Curaçao is focusing on Latin America more than ever. Its geographical location and the cultural mix of European and Latin-American nationals make Curaçao the ideal hub for international operations conducting business with Latin America. In the beginning of 2014, for example, Curaçao signed a Double Taxation Agreement (DTA) with the Republic of the Seychelles and a Tax Information Exchange Agreement (TIEA) with Argentina, showing Curaçao’s commitment to transparency and the development of the Latin American market. This year, Curaçao has made great progress with its business associations with Colombia. One recent milestone was the announcement that Colombians will no longer require a visa to visit the island, which will create more opportunities to conduct business with Colombia in the future.

Opening the Doors for New Ideas and Innovation Creating a business climate that will attract high skilled expats to the island is an important aspect for the country to move forward. According to Behr, “Immigrants bring new ideas, they are energized and incentivized to excel; this energy, experience, and expertise, has the potential to spread and propel business upwards. However, our current immigration laws are stringent and impair the possibility of attracting highly educated and skilled workers to the island.” This is a common thorn not only for the financial sector, but also for many other sectors on the island. Those who do navigate the long immigration process eventually contribute positively to the economy and benefit from the quality of life the island offers. According to Behr, “We need to keep our doors open for new ideas and innovation.”

“We are autonomous and thus able to develop our own tax culture, however, our connection with the Netherlands ensures a stable legislative system. “

The Future of International Business in Curaçao
We have shifted towards an industry where substance is becoming the key factor, where experienced professionals know the ins and outs of International Business Companies (IBCs), and with a legislative and regulatory environment that is compliant with The Organisation for Economic Co-operation and Development (OECD) to support it. Curaçao’s strategic location, its ties with the Netherlands, and being governed based on Dutch law, offers stability. The infrastructure regarding telecommunications is modern, as are the harbor and airport, which offer infinite possibilities of using the island as a hub. Considering these strengths, we can most certainly improve Curaçao’s position as a global player in this sector. And it is vital to the island’s economy that we do so.