Aruba Tax & Business Guide - Deloitte

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Basic facts
Population 99,500 Inflation 3.3% (2005)*
Main languages Dutch, Papiamento, English GDP per head US$21,878*
Currency Guilders/Florins (AWG) GDP growth 4.8% (2005)*
*Economist Intelligence Unit.
Political environment

Aruba is a parliamentary democracy. The Netherlands is responsible for the islandÌs external affairs such as citizenship, defence and foreign affairs, while Aruba retains autonomy over all internal matters. The queen of the Netherlands is the head of state, and is represented by a governor-general, currently Fredis Refunjol, appointed for a six-year term.

The prime minister is Nelson Oduber. Mr Oduber held on to his majority in elections on September 23rd 2005, winning 43% of the vote.
Foreign trade and investment
Exports US$3.1bn (2005)* Imports US$3.3bn (2005)*
*Economist Intelligence Unit.

Main exports: Refined oil, art objects, and machinery, electro-technical and transport equipment.

Major trading partners: The US, the EU and the Netherlands.

The main industries are tourism, offshore financial services, transport (mainly shipping) and oil refining. The island possesses few natural resources and is heavily dependent on imports, including food and manufactures.

As an associate member of the EU, Aruba enjoys free access to EU markets but is not liable for financial contributions.
Business and financing
Business forms Limited liability company, Aruba exempt corporation, general partnership

Most companies choose the limited liability company (NV) as a vehicle to carry out business in Aruba. The Aruba exempt corporation is used for international financial services, as it is subject to fewer formalities and regulatory restrictions.

A business licence and registration with the chamber of commerce are required for conducting most types of business activities.
Labour environment
Unemployment rate 7.3% (2004)* Minimum wage US$762 (monthly)
*Economist Intelligence Unit.

As from January 1st 2006, the minimum wage has been adjusted to US$762 a month.

A non-citizen who wishes to work in Aruba must obtain a work permit from the minister of justice. This is granted only if no suitable local applicant is available.
Taxation
Corporate tax
Main rate 35%

Residents are subject to tax on their worldwide income. A company is resident for tax purposes if it is incorporated under Aruba law or its place of management is in Aruba. Dividends received by a company from a qualifying participation in a domestic or foreign company are exempt from tax. There is no minimum holding period or level of participation.
Individual tax
Rates rise progressively to an effective 57.2% top rate

Resident individuals pay tax on worldwide income; non-residents are taxed only on Aruban-source income. The centre of the taxpayerÌs vital interests is the determining factor for residence. The effective top rate of 57.2% can be slightly higher in the case of unmarried taxpayers or married taxpayers if both spouses are working.
Capital gains
Generally taxed as income

Capital gains of a company are treated as income and subject to tax at normal rates. Capital gains on participations are tax-exempt as a result of the participation exemption. Capital gains realised by individuals on the sale of a substantial shareholding (a 25% participation held in the last five years) are taxed at a rate of 25%. Capital gains realised by an individual from an interest in an entity other than a substantial interest are tax-exempt.
Indirect tax
No VAT or sales tax

There is no value-added tax (VAT) or sales tax in Aruba.
Tax administration and compliance
Tax year Corporations: accounting year; Individuals: calendar year

Companies and individuals must file an annual tax return within two months of receiving a return from the tax authorities. Tax is payable within two months of receiving an assessment. Wage tax must be filed within 15 days of the end of the relevant period. The tax is payable with the return.
Additional tax information
Withholding taxes Dividends 10%, Interest 0%, Royalties 0%.
Tax treaties Aruba has signed the Tax Regulation for the Kingdom of the Netherlands with the Netherlands and the Netherlands Antilles. No other treaties are in force.
Dividends Personal income taxed against a flat rate of 30%. For corporate income tax purposes, the participation exemption applies if the dividend is distributed by a local company or, in the case of a foreign company, if the latter is subject to a tax on its income.
Revenue protection There are no transfer-pricing or anti-tax-haven (CFC) rules. There are restrictions on the deductibility of payments to foreign-related companies in lower-tax jurisdictions.
Groups There is no group taxation.
Incentives Industrial, manufacturing and assembly plants; hotels and property development; financial services; shipping; foreign experts.
Other taxes Customs and excise duties, Property transfer tax, Gift tax, Real property tax, Inheritance tax, Registration tax, Motor vehicle tax, Room tax (hotels), School tax, Stamp duty.