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28th of May 2016
   
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Taxes

Corporate Tax
Corporate or Profit tax is levied on:

  1. The profits of resident limited liability companies, Aruba Exempt Companies, limited partnerships, and other companies or associations of which the capital is wholly or partly divided into shares, member associations and mutual insurance companies;
  2. The profits of associations, of which the capital is not divided into shares, and foundations other than those exclusively for the protection of a general social interest, resided in Aruba;
  3. The profits of entities established outside Aruba (including all companies and associations, of which capital is wholly or partly divided into shares), performed through a permanent establishment in Aruba, from immovable property situated in Aruba, as well as profits from securities not in the ordinary course of business of the company, if the principal is secured by a mortgage on the mentioned property.
Taxable Corporate Profit
The taxpayer is liable to tax for the total amount of profits from business operations and from capital employed outside business operations. No profit tax is levied on the profits earned by a company as a shareholder in other companies (participation exemption). This goes both for dividend income and capital gains derived from an alienation of the shares. For capital gains on the transfer of other assets, it is the possibility to create a so-called replacement reserve. Replacement, however, must take place within four years. It is allowed to carry forward current losses to the following five years. Certain restrictions apply to the deduction of interest expenses and costs related to the use of goods and provided services.

Taxation procedures
Companies must file annual financial statements, comprising a balance sheet and a profit and loss account, together with their tax return. The corporate tax is yearly levied at the flat rate of 28 %.

Double Taxation
Aruba has no tax treaties. However, within the Kingdom of the Netherlands, Aruba participates in the Tax Arrangement for the Kingdom ('Belastingregeling voor het Koninkrijk' or 'BRK'). The BRK has the character of a tax treaty but is in fact a State Act containing inter alia provisions for the avoidance of double taxation. The main benefit of the BRK for Aruban companies is the reduction of Dutch dividend withholding tax on dividends received from a Netherlands company. In general, the Netherlands dividend withholding tax rate is 15%. The BRK provides rules for the reduction of this rate to 7.5% or 5.0%, if certain conditions are met. The Government of Aruba is intended to conclude double taxation treaties with other countries.

Turn over Tax
The Turn Over Tax called "Belasting op Bedrijfsomzetten" (BBO) or Business Turnover Tax is an indirect tax, introduced as of January 2007. BBO is levied of the operating revenues realized by entrepeneurs within the framework of their business or profession by the supply of goods and rendering of services in Aruba. The general BBO rate amounts to 1.5%. A reduced rate of 1% is applicable for that part of the operating revenues that has been realized by the export of goods. Furthermore, certain exemptions are applicable. Most of the exemptions are connected with the medical sector, education, tourism and avoiding double taxation.  

Personal Income Tax
Under the provision of the Income Tax law, individuals residents of Aruba are yearly taxable for their worldwide income from any source. Deduction is allowed for personal payments such as pension premium, life insurance premium, interests paid on debts, certain gifts, and extraordinary for sickness or invalidity, subsistence costs for certain relatives and the burial costs of relatives. Also certain deemed tax allowance for children is granted.

A non-resident is subject to tax for income derived from certain sources, including gains from the alienation of shares from a so-called substantial participation in an Aruban company. A substantial participation is defined as a participation of 25% or more of the nominal paid-up capital by either a shareholder alone or together with certain relatives during the last five years. However, a non-resident shareholder of an Aruban limited liability offshore company or Aruba Exempt Company that engages solely in qualifying activities (reference is made to the chapter on financial services sector) is exempted from the substantial participation regulations and therefore will not be subject to any form of personal income tax on dividends, interest, liquidation distributions or other payments received from the company, nor will such a shareholder be subject to income tax on capital gains on the disposal of his participation in the company.

Income Tax Table
As an example only, the following ranges and rates apply for calculating the amount of taxes due. For update of yearly amount and percentage changes, please visit www.siad.aw

 
Taxable Income rangeTaxable income range 

 

Group I

 

 

Group I 

 

Group II

 

Group II

 III IIIIV VVI 
    7,118   7,00 %  7.40 % 
 7,118 16,759      498,26 9.55%       526,73 10.05% 
 16,759 27,555    1,418.9813,70%     1,495.65 14.45%
 27,555 39,888    2,898.03 18.00%    3,055.67 19.00%
 39,888 53,593    5,117.97 23.50%    5,398.94 24.80%
 53,593 68,944    8,338.65 29.00%    8,797.78 30.60%
 68,944 83,020  12,790.44 34.10%  13,495.19 35.95%
 83,020 98,189  17,590.36 38.00%  18,555.51 40.10%
 98,189117,528  23,354.58 41.75%  24,638.28 44.05%
 117,528145,448  31,428.61 43.20%  33,157.11 45.60%
 145,448186,683  43,490.05 46.25%  45,888.63 48.80%
 186,683250,446  62,561.24 52.00%  66,011.31 54.85%
 250,446296,956  95,718.00 54.20%100,985.32 57.20%
 296,956 -120,926.42 55.85%127,589.04 58.95%

Source: Servicio di Impuesto.
  
Example (for group I):
Year income       80.000
Tax-free allowance   -/-  20,252
Taxable income              59,748
Payable Tax ( group I) = Amount column III (taxable income range column I and II) + % in column IV x (taxable income - column I)
Payable Tax =  8,338.65 + 29% x (59,748 - 53,593) = 8,338.65 + 1,784.95 = 10,123.60

Group I is applicable to:
  1. The married employee whose spouse, with whom he or she is conducting a marital household, does not have an income from business or labor activity;
  2. The employee who is permanently separated from his or her spouse and who has been part of a marital household for at least five years;
  3. The divorced employee who has been part of a marital household for at least five years;
  4. The unmarried employee who has the right on tax allowance for children.
Group II is applicable in all other cases.


Wage Tax (PAYE)
The Wage or Pay As You Earn (PAYE) tax is an advance levy on the personal income tax. This tax is levied as an estimate of the taxable income and is a fixed percentage of employee's wage or salary according to the table stipulated by ministerial decree. The employer is liable for the withholding of wage taxes and has to pay it before the 15th of the following month to the Tax Collector.

Capital Tax
There is no Aruban withholding tax on capital.

Dividend Tax
There is a dividend withholding tax of 10% on dividends. If the ultimate parent or the company itself is quoted on an acknowledged stock exchange, the dividend withholding tax will be reduced to 5%. However, the shares listed on the stock exchange must represent at least half of the total voting rights of the company.

Real Estate Property Tax (Grondbelasting)
This annual tax is levied on the value of the real estate. The tax rate amounts to 0.4% of the value of unfinished or finished properties and is charged to the owner.

Property Transfer Tax (Overdrachtsbelasting)
This tax is levied on the alienation of immovable property. The tax rate is 3% if the real estate value is under Af 250,000 and 6% if the real estate value is above said amount. The tax is payable by the purchaser.

Inheritance, Estate and Gift Tax
Under the Inheritance Tax Ordinance: 

  1. An inheritance tax (Successierecht) is levied on the increase in net wealth obtained as heir or legatee from a resident of Aruba;
  2. A gift tax (Schenkingsrecht) is levied on the increase in net wealth obtained as a gift from a resident of Aruba;
  3. An estate tax at the rate of 8% is levied as an heir, a legatee or as a gift from a non-resident of Aruba.
The inheritance and gift taxes range between 2% and 24%, depending on the degree of kinship and the value obtained from the resident. In case of death, the maximum rate is 6% for goods left to the spouse, children, grandchildren and parents of the deceased.

Import Duties
The standard tariff of the import duties is 12%. Foodstuffs are generally taxed at 0%, while higher rates apply to luxury items.

Excise Tax
Excise taxes are levied on alcoholic beverages, cigarettes and fuel products.

Transit and Export Duties
No duties are levied on exports, except on irregular transit. In the latter case a low levy is applicable.

Gambling Licenses
Casinos pay a monthly fixed license fee of Af 5,000 together with a 4% fee on the gross income.

Room Tax/ Tourist Tax
A tax payable by the guest over the cost of accommodation is levied.
If you operate a hotel or lodging space and you get compensation, you have to pay tourist tax. The tourist tax is levied from your guests staying in your hotel or guest house. They pay tourist tax to you. Then you transfer the tourist tax on to the Departamento di Impuesto (Tax Department).
If you are owner of a condominium and you rent your property through an agreement with a third party, then the third party, being the operator is considered responsible for the tourist tax. The tourist tax must be paid, using a monthly report. This means that you must specify all fees received on a tourist tax return form, and subsequently then have to pay tourist tax. On the site www.siad.aw you can read on what you must calculate tourist tax and how much you have to pay.
Fiscal Incentives
Visit the page on Fiscal Incentives and read about the Favorable Tax policy.

For additional information on taxes:

Direccion di Impuesto y Aduana
( Directie der Belastingen )
Camacuri 2
Phone: +297 522 7474
Fax: +297 522 7475
E-mail: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
 www.siad.aw

or


Servicio di Impuesto (Belasting kantoor)
Camacuri 2
Phone: +297 522 7423
Fax: +297 522 7429
E-Mail: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it


For information on import and excise duties:
Inspectie der Invoerrechten en Accijnzen (Douane)
L.G. Smith Boulevard 84-88, Oranjestad
Phone: +297 582 1800
Fax: +297 583 7164
E-mail: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it