Category Archives: Caribbean Tax & Money Havens

the Netherlands Antilles – Curaçao

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General Taxation system of the Netherlands Antilles

Curaçao’s Economy is based on shipping, tourism and oil refining. The total population is 150,000 and speak at least four languages including Dutch as the official language, but English, Spanish are also spoken.

Curacao Photos
This photo of Curacao is courtesy of TripAdvisor

Curaçao has nearly perfect weather year-round with temperatures between 70-80° F/23-32° C during the day and 60-70° F/15-27° C at night. The island lies outside the main hurricane belt. October-December is the rainy season, but the rain seldom lasts long. The coolest months are January and February, and the hottest are August and September.

The Government of Curaçao, as well as the leading companies, are aiming to make Curaçao a center of e-Business excellence, through investments in all areas of the Island’s technology infrastructure. For e-Commerce companies who establish themselves in these e-Zones a 0% turnover tax and 2% profit tax is applicable, and is exempted from import duties, turnover tax on imported goods.  Foreign employees assigned to an E-business enterprise on Curaçao could apply for the current expatriate legislation. This legislation provides wage tax incentives for employees as well as employers. With the introduction of the e-Zone legislation Curaçao can provide important tax incentives for global e-commerce enterprises.

Non-residents do not have to pay income tax from income generated from outside the Netherlands Antilles.

The 5 islands of the Netherlands Antilles have in principle the same tax laws, although the sales tax on Curaçao and Bonaire is different from the sales tax on St Maarten, Saba and St. Eustatius or Statia.

The income/profit tax of residents is levied on the income / profit generated world-wide, while foreign residents are subject to Netherlands Antilles tax if they generate income or profit from Netherlands Antilles sources. The tax system is a so called classical system, which means that a corporation must pay tax on its profit while the shareholder of such corporation must (again) pay tax on dividends received from the corporation. There are however certain facilities that reduce or eliminate this economic double tax effect.

Although Aruba and The Netherlands are part of the same Dutch Kingdom and the tax laws have been the same up to the period around the second world war, the tax laws of these three parts of the Kingdom have changed in different directions. The fact that the tax laws originate from the same system makes it possible to have the same judges decide on the tax law disputes. The judges from the Netherlands fly in at least twice a year to settle tax cases.

Each part of the Dutch Kingdom has its own right to tax which means that there is also the possibility of double taxation. Already in 1964 the Dutch Kingdom has one Tax Arrangement that solves double taxation issues and arranges for the possibilities to exchange information. This TAK (Tax Arrangement for the Dutch Kingdom) has been amended several times and is at this moment (June 2006) again in discussion on the subject of the dividends paid from the Netherlands to the Netherlands Antilles.

The social security system covers on the national level old age (AOV), widows and orphans (AWW) and exceptional medical expenses (AVBZ) and on the employer-level sickness (ZV) and accident insurance (OV).

The collection of the taxes and social security contributions is being divided between the Island Collector (EO), the Land Collector (LO) and the Social Security Bank (SVB).

Curaçao has special Income Tax Facilities for Penshonado Expatriates:

The income tax offers a favorable pensioners (“penshonado”) tax regime. This regime is available on the following conditions:

– The “penshonado” should be at least 50 years old on the date that he registers himself as a resident

– The pensioner should not have lived in the Netherlands Antilles in the five years before making the application for the  “penshonado” status

– The pensioner must own a house in the Netherlands Antilles with a value of at least ANG 450,000 (US$ 253,000) for his personal use within 18 months after his registration as a resident

– The “penshonado” must have requested the penshonado status from the tax inspector within two months after registration in the municipality register

– The penshonado must be a legally admitted resident

– The “penshonado” and his wife may in general not generate income from activities within the Netherlands Antilles unless this income is generated from a company established in the Netherlands Antilles and in which the “penshonado” has a participation of at least 40% or the income is generated from being a supervisory director of a company.

The income tax rate applicable on the income of the “penshonado” is 10% and is solely applicable to income from foreign sources (or which is considered to be income from foreign sources according to the income tax law such as interest on bank accounts kept within the Netherlands Antilles). It is also possible to report a fixed income of ANG 500,000 (USD 281,000) at the progressive income tax rate as mentioned above.

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Barbados to tap Latin American trade opportunites

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Barbados Minister of Tourism, Richard Sealy has welcomed the ‘highly productive’ meetings held with officials and business leaders in Panama aimed at enhancing bilateral trade and boosting tourism receipts for both countries.

Both countries committed during the five-day trip to enhance bilateral trade and look at opportunities for exporters in Barbados to tap the Latin American market using existing infrastructure and trade arrangements, including through Panama’s Colon Free Trade Zone.

The Colón Free Trade Zone is situated at the Atlantic gateway to the Panama Canal and acts as a tax-free re-export hub. More than 2,500 companies are established there, shipping more than USD 16bn of goods annually.

Representatives of the Chambers of Commerce from the Organisation of Eastern Caribbean States have praised the initiative, stating that the Caribbean needs “to work together to realise tangible trade benefits and the mission was a good start”. They urged Caribbean territories to work together on international trade issues rather than competing with one another.

Talks were also held for the first time with Copa Airlines on establishing air links between Barbados and Panama.

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American companies are living the United States because of high taxes

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The corporate tax rate in the United States is the second highest in the developed world.

American companies are finding new overseas tax havens to legally protect some of their profits from the U.S. tax rate of 35 percent, among the highest in the world. Lesley Stahl reports. Move your corporation or part of your corporation out of the United States while it still is possible. Do not wait as the current negative sentiment could result in restriction on US companies in the future.

See the video covering the story at: http://www.cbsnews.com/video/watch/?id=7376848n&tag=nl.e882#ixzz1VmZRlPaG

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Google use the Dutch Sandwhich to minimize taxes globally

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Google Inc. reduced its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.

Google’s strategies are known to lawyers as the “Double Irish” and the “Dutch Sandwich”, and helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.

See the details in this interesting article from Bloomberg by clicking here.

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French “black list” – St. Kitts and Nevis added

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St Kitts and Nevis Prime Minister, Denzil Douglas, has denounced the Federation’s placement on France’s new blacklist of non-cooperative territories. He said that efforts taken by the Federation, and by other OECS countries, to meet international compliance standards relating to their financial services sector, is like “working towards a moving target.”

A statement from the Prime Minister’s Office said: “This blacklisting by France of countries that they claim have failed to cooperate on tax issues has caused tremendous concern for the Federation for a number of reasons.”

“The Federation has concluded negotiations and initialed agreements with 17 countries for the exchange of tax information and double taxation agreements by the end of 2009 and was in a position to sign all of these agreements at that time.”

Douglas commented: ”The Federation was told that we would have to wait until these OECD countries carried out their internal bureaucratic processes before we could be given a date or a venue for signature. We were able to sign eight of these agreements by the end of 2009 and we signed our ninth agreement with the UK in January of this year.”

”It is extremely unfair for St Kitts and Nevis to now be penalized by France for not meeting the required standard of 12 signed tax agreements as we sit and wait for OECD member countries to inform us that they are ready to sign these agreements.”

Douglas further informed that, responding to a call by St Kitts and Nevis and other OECS countries for assistance in getting agreements signed with OECD member countries in a more timely fashion, the World Bank has announced the appointment of a consultant to assist the OECS countries with this process.

“This consultant has actually negotiated with France the text of a Tax Information Exchange Agreement on behalf of the OECS countries which the Federation signed off on last month and we are now awaiting a date for signature of this agreement from the French government. It is therefore surprising that despite this development, France has seen it fit to move ahead of its other G20 counterparts to issue its own blacklist and to announce sanctions with effect from March 1, 2010, which are indeed quite punitive and will completely stagnate any investment by French nationals into the Federation and the OECS region. It is of further concern that countries blacklisted by France, even if they meet the international standard one week later, will remain on this blacklist until January 1, 2011, when this list will again reviewed,” the statement noted.

The statement added that it was based on the fear of situations like this blacklisting by France that in March 2009, the government passed the St Christopher and Nevis (Mutual Exchange of Information on Taxation Matters) Act, No 7 2009, which provides the legal framework for the Federation to give the force of law to Tax Information Exchange Agreements (TIEAs) signed by the Federation and allowing the Federation to unilaterally list countries in a schedule to this Act which would be entitled to make requests for tax information to the Federation pursuant to rules which are included in a schedule to this Act.

“These rules are based on the OECD model [TIEA] and are therefore in compliance with the international standard. The reason for the government taking this initiative was firstly to ensure that we would not be hindered by the cost and time involved in negotiating tax treaties to enable us to comply with our international obligations. Our experience in being able to receive dates for the signing of our already negotiated agreements has demonstrated that this fear was in fact justified,” it said.

“The OECD in a publication on its website dated April 21, 2009, entitled ‘Countering Offshore Tax Evasion: Some Questions and Answers on the Project’ clearly stated that the standard for transparency and tax information exchange can be implemented “through bilateral tax treaties or [TIEAs]; by multilateral agreements; or by domestic legislation allowing for the provision of information on a unilateral basis.”

Despite this endorsement of the unilateral mechanism by the OECD in its publication, the unilateral mechanism adopted by the Federation in March of 2009 to facilitate the provision of tax information to countries that make requests to the Federation is yet to be adopted by the OECD as a mechanism for implementation of the standard.

Douglas further noted that the government has been advised that the Global Forum, following an intervention made by St Kitts at the September 2009 Global Forum in Mexico, is now looking into the matter. However, this move to review this mechanism has obviously come a little too late for the Federation and many other OECS countries.

The Federation will be signing a TIEA with six Nordic countries on March 24, 2010, and will at the latest be removed from the OECD “grey list” on that date.

“This being said, we will continue to do our part to advocate for the official recognition of the unilateral mechanism to ensure that in the event that the threshold is again changed in the future, that we will not be in the position we now find ourselves where we are at the mercy of the bureaucracy of OECD countries. We will also continue with our attempts to bring a final conclusion to the negotiations with the countries that we have already initialed tax agreements with and with other countries that we are currently negotiating with,” said the statement.

St Kitts and Nevis has already signed agreements with Monaco, The Netherlands, The Netherlands Antilles, Aruba, the United Kingdom, Denmark, Belgium, New Zealand and Liechtenstein.

Countries the Federation has initialed or concluded negotiations with and are awaiting dates for signature are Australia, Canada, France, Germany, Norway, Sweden, Greenland, the Faroe Islands, Iceland, Finland and San Marino.

Countries the Federation has commenced discussions with about TIEAs but have not yet confirmed the text for these agreements are India, Japan, the Seychelles and the United States.

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