Aruba Belastingen

Law Order:
The legal system is mainly in Dutch footing. For example, investors' rights are protected in much the same way as in the Netherlands. Mortgage rights can be exercised regardless of the nationality of the lender. Aruba has the Court of First Instance ,
Appeal, the Court , established in Curaçao and cassation is lodged with the Supreme Court in the Netherlands.

Establishment in Aruba:
The change of policy regarding the admission Dutch
is per 21 February 2001 MODIFIED.

The permit seeking to stay and / or work is provided by the Department of Public Safety and is issued for the duration of the employment, for a period of up to 3 years. After the validity of the authorization shall request a permit issued for an indefinite period.

Companies must have a residence. The Director of the company shall permit a director. Both are issued by the Ministry of Economic Affairs.

Taxes:
The Aruban tax has traditionally been a large number of similarities with that of the Netherlands. Thus, the systematics of the various taxes often reflect those of the Netherlands. Of course, there are also differences. The main ones will be discussed in the brief treatment of the various taxes that Aruba has. These are: income tax ( EN corporation)
– income tax
– payroll
– duties
– Excise (alcoholic beverages, cigarettes, perfumes)
– land tax (NL real estate taxes)
– stamp tax
– inheritance tax (death and gift)
– transfer tax

Taxes are not familiar with Aruba:
– property tax
– withholding tax on dividends, rente of royalty’s
– BTW
– capital tax

Aruba kent, except for the Kingdom of Taxation (BRK), no tax treaties with other countries. The BRK applies to Aruba, the Nederlandse Netherlands Antilles a. In addition, with respect to the (for 1 January 1988 terminated) Treaty with the United States just yet Article VIII (pension) and a number of related items. This article governs the country in which interest earned is taxed.

 

Income tax

Are subject to income tax:
Established in Aruba limited liability companies, partnerships limited by shares, other companies or organizations of which is wholly or partly divided into shares, cooperative societies and mutual insurance – companies.

Established in Aruba associations whose capital is not divided into shares and foundations , unless only the general interest.

Not in Aruba incumbents, whose profits are derived from:
a. a permanent establishment in Aruba
b. property located in Aruba
c. mortgage loans based on property located on Aruba

A number of special tax provisions in the Ordinance:

Investment: 12% on new buildings, 8% on other assets. The deduction is applied in the year of purchase and the following year.

Accelerated depreciation: one third of the anticipated acquisition may be amortized.

Replacement Reserve: gains may be reserved with replacement should take place within 4 years after the year in which the replacement reserve was formed.

1/10 the rate: This rate applies to profits of a permanent establishment abroad and on dividends from non Aruban companies. The condition is that the foreign permanent establishment / company in some form of income tax is subject. For dividends also follows that the participation of the Aruban company in the foreign company at least 10% is. Gains derived by a permanent establishment in the Netherlands and the Netherlands Antilles are not taxed on Aruba.

Loss Compensation: “carry forward” 5 year. Aruba does not "carry back".

Shipping- aviation- and insurance companies are subject to special, generally favorable arrangements.

The Aruban tax does not start-up losses (some exceptions) and no fiscal unity. The rate varies from 31% to 39%.
Income tax

Subject:
– Residents of Aruba
– Not living in Aruba persons enjoy certain income such as:
– salary as a director or member of the Board of Commissioners of Aruba NV.
– income from immovable property;
– dividends and profits realized on sales of shares in a corporation if the shareholder has a substantial interest in the capital of the company. A substantial interest is present if, an individual shareholder, or for the last 5 years has been, for at least 25% paid-up capital, either alone, or together with his spouse or certain relatives.
– NB: Dividends and income from substantial interest Aruban offshore corporations in Aruba are not taxed. Of course, this income is taxed in the State.

The rate of income tax is progressive with a maximum 57.2% for earners and 60% for two-earner.
This rate is from ± Afl. 231.500 due.
Certain income is a special rate that varies from 15% to 30%.

For so-called. "Expatriates" subject to a number of special arrangements.
Tax can be reimbursed to them:
– Removal expenses
– Redesign to Cost 2 months' salary, with a maximum of Afl. 12.000,-,at
arrival at and departure from Aruba.
– AOW / AWW premiums in the Netherlands if they are part of a plan.
– Hotel costs during the first two months of stay in Aruba.
Other major taxes

Land tax:
This tax is levied on the value of real property.
The tax is 4 promiel of the so-called. founder value less an exemption of Afl. 60.000,=

Inheritance tax:
Inheritance tax is payable on obtaining as a result of the death of a resident of Aruba and gifts by a resident of Aruba. The maximum rate for the surviving spouse, children, parents and grandchildren of the deceased 6%. When a gift within this group, the same rate. It should be noted that a gift of a Dutchman who draws on Aruba, after one year subject to inheritance tax Aruban. A so-called Transitional Tax is levied upon acquisition of an estate or a gift of Aruba located on property that is owned by a non-resident of Aruba. The rate is 8%.

Transfer Tax:
Legal transfer of property in Aruba lead to the imposition of transfer tax.
The rate 3% the value in the economic.
Offshore Companies

Offshore companies are companies whose shares are held by non-residents of Aruba and their activities largely outside Aruba perform. It is an offshore company may carry out transactions with other companies to go offshore. The Warranty Gains Tax Regulation ensures a special low rate of 3% Income tax on offshore investment companies and a reduced rate of 2.4% on the first Afl. 100.000,= Profit. In addition, offshore companies under Articles 14 and 14A exempt from tax on capital gains.

The activities described in Articles 14 14A, and are, in general, to invest, holding of shares, receivables and payables and real estate, royalties and invest in patents and other forms of intellectual property.

By means of a ruling, which prior to the start of the activities during the inspection must be requested, may also be other activities under the action of the articles 14 14A and are brought.

The offshore status of an Aruban company is also confirmed by a so called. Foreign exchange permit which is issued by the Central Bank of Aruba. This permit allows the company free of control by the Central Bank foreign exchange and payment of commission in Aruba.

Some types of offshore companies are:

Offshore “trading companies”:
Companies engaged in foreign trade may obtain a preliminary ruling under which the income is taxed at the rate
of 2.4 – 3%.

Royalty companies:
Vennootschappij that patents, copyrights, trademarks and similar rights are, be entrusted with the guaranteed rate of 2.4 – 3% of the net royalty income received.

Real estate companies:
Companies that invest in property located outside of Aruba are taxed at 2.4-3%, provided that in the country where the property is located only form of income tax is levied.

Holding – and investment companies:
These companies have the primary objective of investment in securities such as shares and other securities of justice, bonds or other interest-bearing securities under any name and in whatever form. The income is taxed at 2.4-3%. Capital Gains – or losses, and increases or decreases in assets when calculating the taxable profits disregarded.
Reasonable expenses may be deducted. Interest is not deductible unless it is paid to a bank or similar financial institution, whether this ruling is recorded in a.

Offshore banks:
These banks must hold a license from the Central Bank of Aruba, which is authorized to enter into international transactions with non-residents and offshore companies. The tax regime is the same as for holding – and finance.

Finance:
Based on the general scheme of Articles 14 and 14A, the finance companies are not allowed to deduct interest expense.
However, it is possible in advance to obtain a ruling on the basis of which it is possible. The tax inspector, a number of conditions being imposed.
The percentage of the income tax is also here 2.4- 3%.

Offshore “(Captive) Insurance "companies:
For such companies, special rules introduced.
The main rule is that on the basis of a prior request shall be charged against ruling 2.4-3%.

The Aruban Exempt Company:
De A.V.V. was in Aruba 1988 introduced. The aim of the introduction of the A.V.V. was to create better opportunities for offshore companies in Aruba. De A.V.V. is desigDe A.V.Vnon-residents.

De A.V.V. is completely exempt from income tax. Instead pay A.V.V. an annual registration fee of Afl. 500,=. The exemption is governed by law , there is therefore no need to be requested ruling.
The minimum capital is only $1. There must be at least a voting share issued. Both shares and bearer shares may be.
It is the A.V.V. as well as "normal" offshore companies authorized to conclude transactions with non-residents, and other GTS's or offshores.
Establishment of the A.V.V. effected by notarial deed. A shareholder is sufficient, the founder does not need to be.
The directors of the company can consist of both natural persons and legal persons from. An individual may not residents of Aruba. A legal (legal representative) is usually a trust company.

De A.V.V. there is no need to keep records.

In addition to the obvious (fiscal) advantages, the A.V.V. also has disadvantages such as:
the participation exemption is not applicable to the Dutch holding of shares in a GTS, In other words, by a A.V.V. dividend paid to a Dutch company is fully subject to Dutch corporate.
De A.V.V. is not entitled to the reduced withholding tax on Dutch Dutch dividenden.Een (daughter) company pays a dividend A.V.V. shall thereupon 15 % dividend should keep.

The offshore industry is moving in Aruba:
In 1995 The government has a high commissioner appointed for the offshore. This is to provide the offshore industry in Aruba on a lake with , onder other , Curacao , the British Virgin Islands and the Bahamas to bring competitive level. We are working hard to improved services and stronger products in the offshore. Some changes have already been implemented.
May be expected in the coming year more changes and new products will be introduced.

Free zone companies:
Companies engaged in – and processing and transit of goods through and within the free zone are subject to special tax regime.Over the gains achieved with specific free zone activities, they pay income tax at a rate of 2%.
It's free zone companies limited permitted to trade with the interior. The majority must be present there geëxporteerd.Op the activities of the free zone mainly in the – and transit of cigarettes and alcoholic beverages and the operation of certain products (m.n. rice).
Based on a soon to introduce change in the Free Zone Ordinance will be permissible from the free zone to carry out consultancy work for foreign-based clients. The profits earned from those activities than against 2% charge.
Extra info

For further information please contact :

mr H.O. Scaling

Scaling & Partners N.V.
L.G. Smith Boulevard # 50
P.O. Box 5055
Oranjestad
Aruba – Dutch Caribbean
Telephone (297) 582 7286
Fax (297) 582 8935
Mobile (297) 731 5050
E-mail: schaling.aruba @ setarnet.aw