Sharia’a Compliant Shipping and Aircraft Activities in the Dutch Caribbean

September 05, 2012 8:27 PM

The Curaçao financial services industry originates from the beginning of World War II, when Dutch companies sought refuge in the islands of the Netherlands Antilles by transferring their seat.

From the early 1950’s, the Netherlands Antilles (which no longer exists), and in particular Curaçao (which is now a separate jurisdiction within the Kingdom of the Netherlands), has developed into an international financial services jurisdiction, often used for international structuring. By introducing favourable tax legislation, Curaçao has been able to attract some of the biggest international companies. 
 
In addition to the legal and tax advantages, Curaçao in itself is an interesting international tax-planning jurisdiction, with a solid and experienced infrastructure of financial services companies, such as trust companies, banks and advisory firms. Curaçao is also an interesting jurisdiction for the shipping industry. Aruba (also a separate jurisdiction within the Kingdom of the Netherlands) on the other hand is an interesting jurisdiction for the aircraft industry.
 
Islamic Finance
 
Due to the combination of its religious, social and ethical attributes, Islamic Finance has seen a tremendous market growth in the past decade, and investors are tapping into this alternative financing venue – the effects of which are visible in Islamic and non-Islamic nations around the world.
 
Islamic Finance practitioners may take advantage of Curaçao’s solid reputation in the financial services industry by structuring, for example, shipping and aircraft transactions. Structures that could be used to support a Sukuk issuance by shipping and aircraft companies are the Sukuk-al-Ijara structure, the Sukuk-al-Mudabara structure and the Sukuk-al-Wakala structure.
 
Curaçao and Aruba law provide for a great deal of flexibility when structuring finance transactions. There is freedom in choice of law, jurisdiction and arbitration, making it quite easy to structure Islamic Finance products.
 
Tonnage Tax Regime
 
Curaçao positions itself as an interesting jurisdiction for the shipping industry. The tonnage tax regime has been modernised recently, making it more attractive and suitable for use. Curaçao’s geographical location makes it an excellent location for shipping activities. It also has one of the largest dry dock facilities in the Caribbean and is situated outside the hurricane belt.
 
Aircraft

Aruba boasts high regulatory standards in compliance with safety standards and recommended practices of the International Civil Aviation Organisation (ICAO) and is rated Category 1 by ICAO and the US-FAA International Aviation Safety Assessments. The Department of Civil Aviation has an excellent reputation for efficiency and safety oversight. In addition to this, Aruba is a signatory to the Cape Town Convention on International Interests in Mobile Equipment and the Aircraft Equipment Protocol. This establishes a framework for international interests on aircraft and aircraft engines, and provides for reciprocal recognition of legal (security) interests and remedies of enforcement, which facilitates the acquisition and financing of aircraft and aircraft engines. This is a very important factor, which distinguishes Aruba from other offshore aircraft registration jurisdictions.

By Maike Bergervoet
Spigt Dutch Caribbean

www.spigtdc.com