Offshore Financial Center is (OFC): Any country or territory whose laws way be used to avoid or evade taxes which may be due in another country under that country's laws. Curacao is an offshore center, but the Netherlands is one of the biggest. These centers are used by Multi National Corporations (MNC) and High Net Worth Individuals (HNWI). The issue is that some counties lose tax income and the country who develops offshore obtians extra in come. The rich counties do not like offshores. Some studies state that OFC played a crucial role in the global financial crisis of 2008 and 2009. Beside MNC and HNWI, professionals are involved: lawyers, accountants, bankers and notaries are involved. An additional problem withOFC is that part of the business is money laundering and the financing of terrorism.
Free Zone is part of the OFC model. But this is not discussed here. OFC is used by (Small Island Developing States) SIDS as a development model to upgrade the country.Communication and specially telecommunication are a very important conditionfor the OFC to develop. OFC started very early the1900s and even earlier. From the start the rich countries were against this development and looked for ways to stop it. In the 1960s the OECD was becoming very active in attempts to control this phenomenon. Action Financial Task Force (AFTF) started in the late 1980s to fight against criminal money and terrorism.
In the Netherlands Antilles the Free Zone was created in 1953. But as already stated, this is not discussed here. The OFC in the Netherlands Antilles started in the 1940s when Dutch companies moved to Curacao to avoid being confiscated by the Germans. But it really started when the Netherlands and the United States signed a treaty in 1948. This treaty became active in 1955. The OFC in the Netherlands grew from 1955 till 1988. In the 1970s many banks established in Curacao. In 1990 21.000 offshore companies were established in Curacao. Many professionals work in the sector. They organized them self in branch organizations. These organizations had great influence with the government. In the mid 1980s the OFC generated half of the income of the government.
In 1988 the OFC stared to decline because the Unites States reviewed the treaty. Some state that the Netherlands Antilles over playedits hand in the negotiations. The sector stated to innovate. They developed the Pensionado construction and the Stichting Particulier Fonds. But the international pressure remained and the international completion increased.
In 2011 the OFC became a priority of the economic policy of the Government of Curacao. It is not clear what that means, beside negotiating new tax treaties.