WILLEMSTAD – Curaçao has offered tax incentives to large companies and hotel developments for more than seventy years, but economist Rob van den Bergh and legal expert Jeff Sybesma are questioning whether these so-called “Tax Holidays” are still appropriate in today’s economic climate. While major projects reap millions in tax benefits, local entrepreneurs are often excluded.
Established in 1953, the fiscal regime allows companies that invest at least 5 million guilders to benefit from substantial incentives. These include a reduced profit tax of just 3 percent for six to eleven years, exemptions from import duties, sales tax (OB), and property taxes, as well as no income tax on dividend payouts.
Benefits Flow to Big Players
Large corporations like Damen Shipyards, the oil refinery, FLOW, Sandals Resorts, and TUI Blue typically qualify automatically due to their large-scale investments. However, the high entry threshold means that small and medium-sized local businesses are left out of these programs.
In contrast, Aruba abolished its own Tax Holiday in 2002 without experiencing a drop in investment interest in tourism-related projects. Meanwhile, despite decades of tax breaks, Curaçao’s tourism growth remained relatively stagnant for years.
Booming Construction Without the Need for Tax Holidays
The Caribbean is currently experiencing an unprecedented tourism and construction boom. Development demand is outpacing local construction capacity, driven by a surge in interest in vacation homes and apartments from foreign buyers—an effect that has accelerated since the COVID-19 pandemic.
Property prices in coastal areas have reportedly increased by 40 to 75 percent over the past five years, with historic Willemstad seeing rises of 25 to 40 percent. According to local banks, tourism projects are now generating exceptionally strong cash flows.
Government Missing Out on Millions
Customs data suggests that the import duty exemptions alone cost the government approximately 100 million guilders per year. This is in addition to lost revenue from profit tax, sales tax, and property tax exemptions.
For large-scale projects, the combined tax benefits can reduce total costs by 20 to 30 percent compared to smaller developments. Many hotels apply for new tax breaks when planning renovations at the end of their Tax Holiday periods.
Growing Concerns Over Overtourism
The current construction boom carries risks of overtourism. Residents are already experiencing higher living costs, traffic congestion, limited beach access, and environmental degradation. In response, the Curaçao Tourist Board has commissioned a carrying capacity study to assess the island’s limits.
Although thousands of new jobs are being created in construction and hospitality, local labor shortages mean these positions are often unfilled by residents. As a result, most economic gains benefit foreign investors, while income inequality on the island continues to widen.
A Call for Reevaluation
Van den Bergh and Sybesma argue that the time has come to reconsider whether these decades-old tax incentives still serve the island’s broader economic and social goals. With Curaçao’s real estate and tourism sectors already booming, they question whether such generous tax breaks are still necessary—or whether they simply widen the gap between large investors and local entrepreneurs.
