Financial Crime World

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The Rise of Curaçao as a Tax Haven

In the mid-20th century, Curaçao emerged as a significant tax haven in the Caribbean. This phenomenon was facilitated by a series of strategic decisions made by the Dutch government and multinational corporations.

The Creation of a Conduit for Tax Avoidance

  • In 1965, the Dutch government accepted the BRK (Tax Arrangement for the Realm), which granted exemption from dividend taxes at source to the Antilles and an emergency brake to the Netherlands.
  • Representatives of multinational corporations like Unilever, Royal Dutch Shell, Philips, and C&A exerted pressure on the Curaçao government to create favorable tax conditions.

Expanding Tax Evasion Opportunities

  • The BRK enabled companies to concentrate dividend or royalty payments in an Amsterdam shell company, which could then send them tax-free to Curaçao for further low-duty uses.
  • This opened up fresh corporate tax avoidance opportunities via the Netherlands, allowing companies to minimize their tax liabilities.

Shaping the BRK’s Ramifications

  • Dutch corporations and financial institutions likely played a significant role in shaping the BRK’s ramifications, generating tax revenue and income for the Dutch legal, financial, and accounting sector.

Attracting Global Customers

  • The Antillean government systematically expanded facilities to attract customers from around the world.
  • Laws were revised on patent holding companies, providing long-term guarantees of shell company tax rates, and exempting offshore banks from supervision.

Implementing Banking Secrecy and Low Entry Requirements

  • Curaçao adopted a self-imposed banking secrecy regime, shielding the identity of beneficial owners.
  • The island implemented low entry requirements for offshore banks, contributing to its growth as a tax haven.

Rapid Growth of Shell Companies and Revenue Increase

  • The number of shell companies grew rapidly, peaking in the mid-1980s.
  • Public revenue from profit taxes increased slowly but steadily at first, then very rapidly.