Curaçao retailers protest sales tax hike as Venezuelan uncertainty looms

Written by  //  April 10, 2013  //  Caribbean  //  No comments

Willemstad’s colorful Punda waterfront district. (Credit: Larry Luxner)

Willemstad’s colorful Punda waterfront district. (Credit: Larry Luxner)

Economic difficulties in Curaçao — the largest Dutch-speaking island in the recently dissolved Netherlands Antilles confederation — as well as political uncertainty in nearby Venezuela, are affecting retailers ahead of a planned hike in the country’s sales tax on luxury products such as perfumes, jewelery and electronics from 6 percent to 9 percent.

Shopkeepers in Willemstad’s colorful Punda waterfront district say the end result is that Curaçao’s Central Bank will receive less foreign currency from tourists, and that sales tax revenue will actually decline as a result.

They say only shops on board cruise ships would benefit, since the ships would be exempt from such a tax — possibly pushing tourists to fellow Dutch-speaking island Aruba, where the sales there is only 1.5 percent.

“Currently retailers are absorbing the 6 percent sales tax from our margins to sustain the duty free price structure, but with a 9 percent sales tax, it will be an impossible burden to bear,” warned Meena Hemrajani of Le Rouge International B.V.

Aggravating the situation is the March 5 death of President Hugo Chávez in Venezuela, where the recent massive devaluation of the bolívar from 4.3 to 6.3 to the dollar has made everything much more expensive — including travel to Curaçao by the all-important Venezuelan market.

“Now with fresh elections around the corner, we will have to wait and observe its effect on the Curaçao economy,” she said, referring to the Apr. 14 presidential election pitting Chávez’s hand-picked and heavily favored successor, Nicolás Maduro, against opposition challenger Henrique Capriles-Radonski. “Yet we have to hold down the fort and grow with aggressive strategies.”

In the midst of such uncertainty, Le Rouge International will soon open a 310-square-meter shop under the name “The Yellow House/La Casa Amarilla” in the heart of the Willemstad shopping district. The expanded outlet will offer perfumes, cosmetics, skin-care products, watches, fashion jewelry, sunglasses and handbags all under one roof.

Hyatt denied
A Curaçao court has denied a bid by Hyatt Corp. and Hyatt Curaçao NV to resume control of the former Hyatt Regency Curaçao Golf Resort, Spa & Marina.

In December, Santa Barbara Hospitality NV removed Hyatt as manager of the resort, and renamed the property as the Santa Barbara Beach & Golf Resort Curaçao. The company installed Benchmark Hospitality International as the property manager and announced Jan. 29 that it was open for business under the new name.

William Brewer, a lawyer for Santa Barbara, said: “In our client’s view, Hyatt had proven that it was incapable of managing this property in accordance with the terms of the management agreement.” Benchmark now manages the 350-room resort, which has 38,000 square feet of indoor and outdoor meeting and banquet space.

The owner claimed that under Hyatt’s management, the resort missed 2011 revenue projections by almost $12 million, and that occupancy rates were 44 percent, about 22 percent lower than expected. Both revenue and occupancy were lower than projected in 2012 as well, said the owner.

Smith Travel Research said in a report that in the 12-month period ending Oct. 30, 2012, occupancy at the resort was only 53 percent vs. almost 80 percent for the properties against which it competes. The average daily room rate in 2012 was $182.65, compared to $238.58 for its competitors, said STR.

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