EMA Foreign Investor Information - Key information for investing in Aruba
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EMA Foreign Investor Information
Key information
for investing in Aruba
©Aruba, 2013 Reproduction permitted with mention of source
Table of content
1. Forward
2. Introduction
3. Incentives to Invest
4. Types of Company Structures
5. Business and Directors Licenses
6. Tax Structure and Compliance
7. Banking & Finance
8. Capital Transfer
9. Labor-, Social Security- and Pension Regulations
10. Visa and Immigration policy
11. Practical Information
12. Appendix
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3
1. Forward
Welcome to the ‘Europe Meets the Americas’ Business Conference 2013!
Aruba has a clear and demonstrable commitment to a sustainable future, and in its policies the
Government of Aruba fully supports, implements and promotes this vision.
Aruba will form a Gateway for trade and knowledge toward as well as from the Americas, in collaboration
with our partners, such as the Netherlands. To that end, both countries signed a cooperation protocol in
2011. With the Netherlands in Europe and Aruba between North and South America, there are two strong
gateways in place for connecting three continents into dynamic business and investment opportunities.
Due to its historical economic, social and cultural links with both South America and the Netherlands, Aruba
can function as a stepping stone, culture translator, diplomat, sales representative, market
researcher, matchmaker, project manager and supplier for the supporting services in the field of market
research, financing, insurances, etc.
Aruba, as a Business Gateway, can assist entrepreneurs and investors in making use of myriad business
opportunities between Europe and the Americas.
We hope that this overview of information for investors will help you discover what Aruba’s Gateway has to
offer, and we look forward to ongoing contact.
The Europe Meets the Americas Organizing Committee
4
5
2. Introduction Political stability, a strong legal system, an educated workforce, a safe environment and governmental policy promote Aruban economic growth. Aruba has built a very strong brand name worldwide as one of the top tourism destinations in the Caribbean. It is therefore not surprising that tourism is Aruba’s main economic activity, which has resulted in Aruba enjoying one of the highest standards of living in the Caribbean region. Approximately 75% of the Aruban gross national product is earned through tourism or related activities. Over 1.4 million tourists visit the island yearly, of which approximately 850,000 are stay-over visitors and 550,000 are cruise passengers. The majority of tourists are from the United States and from Venezuela. The Queen Beatrix International Airport offers daily direct flights to and from major cities in Europe, the United States, South and Central America and the other Caribbean islands. United States pre-clearance is in place, facilitating travel to the US. Aruba’s total population consists of approximately 102,000 habitants including over 90 nationalities. Dutch is the official language, while English and Spanish are widely understood and spoken. The local language is Papiamento. The education system in Aruba, as in the other Dutch Caribbean islands, is based on the Dutch system, and the high standards applicable to institutions in the Netherlands are met by local schools. Aruba has an efficient and reliable communications infrastructure including direct satellite connections. Additional services include mobile communications (gsm), digital leased lines and ISDN. The monetary unit of Aruba is the Aruban guilder (AWG). The exchange rate for the Aruban guilder has been pegged to the U.S. dollar since December 12, 1971 at AWG 1.79 per U.S. dollar (USD). A foreign exchange commission of 1.3% is levied on certain payments by residents to non-residents. The official selling rates for other currencies are set daily on the basis of their rate of exchange with the U.S. dollar abroad. Economic opportunities are continuing to develop rapidly in the economies across the Americas and Europe making the conditions perfect for commercial services and products to be sold across continents. Aruba with 6 all the above mentioned advantages, is poised and ready to be your gateway partner.
3. Incentives to Invest
Aruba has long attracted investments for the Free Zone Aruba (FZA)
tourism sector, which resulted in huge growth and the The Free Zone of Aruba has been operational since
creation of a world-renowned vacation the 1950's and legislation has been adapted over the
destination. Aruba’s economic policy fosters an open, years to keep up with the new business opportunities
market-driven economy, fuelled by an excellent offered by shifting economic growth and globaliza-
service sector, one of the most educated tion, along with international integrity requirements.
workforces and an investment friendly environment. Aruba's favorable geographical location and the free
Especially the capacity of the community and the zone's strategic location as a distribution point for
networks to support business expansion and the services, goods and innovative technology makes the
development of business opportunities is a key Free Zone of Aruba a perfect overseas base for any
driving factor in the Aruban economy. internationally operating company.
Currently, Aruba is looking to diversify the economy in The Free Zone of Aruba offers opportunities for: trade
the context of “sustainability and smart growth”, and in products, technology based activities and all types of
has created an attractive package for investors and services/e-commerce aimed at foreign clients. Goods
entrepreneurs wishing to benefit from the location, can be brought in duty free and subsequently stored,
safety and security of Aruba to develop their business exhibited, assembled, prepared, packed or manufac-
activities. Government policy supports investments tured for re-export. The service/e-commerce sector is
to promote further economic diversification and the upcoming sector in the Free Zone of Aruba. There
enhance the quality of life, organizations such as are opportunities for medical clinics, training and
Arina and Free Zone Aruba are there to help investors, consultancy, technical services such as engineering,
tax incentives are available along with a pro-business logistics, software development, renewable energy,
environment. research and development and many more. High-
tech companies, capital intensive industrial, com-
The Aruba Investment Agency (Arina) mercial and service-oriented businesses looking for
7 Arina is committed to helping local and foreign a customer-oriented, pro-business and safe environ-
investors get their businesses established in ment will find interesting investment opportunities
Aruba as swiftly and as easily as possible by: in the Aruban Free Zone.
• Providing information to potential investors;
• Offering an extensive network of important Goods can also be shipped directly from the supplier
contacts; to the customer without going through Aruba, which
• Advising and assisting potential investors on has transformed traditional trade into services. The
investment opportunities and policies; contracts are signed through the Free Zone company
• Providing Account Managers to channel and additional services such as sales and marketing,
investors’ proposal or requests through maintenance and consulting may also be offered. In
Government channels. recent years there has been increasing interest from
European, North- and South American companies
Arina is structured to give attention to the that want to make use of commercial opportunities
stimulation, coordination and facilitation of in the Caribbean and Latin America, using the Free
economic activities in order to assist the (further) Zone of Aruba as a hub and showcase.
growth of the business activities and the total
economy of Aruba. For on-shore companies
Arina is the “one stop shop” main point of contact in
Aruba. ARINA offers its services in helping the
investors FREE OF CHARGE get their businesses
established in Aruba as swiftly and as easily as
possible. For more information, please see
www.arina-aruba.com.
Goods can also be shipped directly from the supplier Aruba (FZA) NV, a limited liability company owned by
to the customer without going through Aruba, which the Aruban government. FZA issues the admission
has transformed traditional trade into services. The licenses and administrates the operating requirements,
contracts are signed through the Free Zone company using a 'one-stop shop' model, which facilitates and
and additional services such as sales and marketing, accelerates the establishment of a client's company
maintenance and consulting may also be offered. In in the Free Zone. FZA assists, guides and supports the
recent years there has been increasing interest from client in starting up a free zone company.
European, North- and South American com- Detailed information regarding the admission
panies that want to make use of commercial procedure is available at FZA and its website.
opportunities in the Caribbean and Latin America,
using the Free Zone of Aruba as a hub and showcase. Imputation Payment Company (IPC)
The Imputation Payment Company (IPC) is a public
The Free Zone of Aruba covers two limited company (NV) or a limited liability company
Customs controlled areas which are used by (VBA) that pays the regular Corporate Income Tax
companies trading in goods. The Bushiri Free Zone (CIT) rate of 28%. When certain stringent conditions
is situated in close proximity to the Oranjestad (e.g. annual expert declaration that IPC complies to 8
harbor and approximately 3 miles from the certain requirements) are met, the shareholder of
international airport. The Barcadera Free Zone lies the IPC can request an imputation payment (refund)
adjacent to the new cargo port at Barcadera and near of 26/72 of the (formal) dividend distributed. Provid-
the international airport, and there are opportunities ed that the 0% dividend withholding tax is applicable,
for development. Service companies may choose the effective tax rate can be lowered to 2%.
their office location on the island.
Only the following qualifying activities are allowed:
Free Zone companies enjoy many benefits: - Exploitation of quality hotels (with a revenue
• 2% tax on all profits generated from Free per room of at least USD 200);
Zone activities - Exploitation of shipping enterprises;
• 0% import duties on goods imported and - Exploitation of aviation enterprises;
exported through the Free Zone - Developing, acquiring, holding, maintaining
• 0% turnover tax over the turnover generated and licensing of intellectual-, industrial
from Free Zone activities and similar ownership rights or user rights;
• Exemption from foreign exchange
- Captive insurance;
commission on foreign currency payments - Holding company;
• no local partner is required to establish a
- Active financing (not being a credit
Free Zone company (full foreign ownership) institution) of other enterprises or
For a complete list of benefits and advantages, please companies whether or not intra-group;
visit the FZA website: - Investing of funds, except in real estate
www.freezonearuba.com and funds which are put at the disposal of
group companies;
Management of the Free Zone - Exploitation of a company aimed on
The free zones of Aruba are managed by Free Zone generating sustainable energy.
Only the following qualifying activities are allowed: - Investing of funds, except in real estate;
- Exploitation of quality hotels (with a revenue - Licensing of intellectual and industrial
per room of at least USD 200); ownership rights.
- Exploitation of shipping enterprises;
- Exploitation of aviation enterprises; The exempt company has to file annually CIT
- Developing, acquiring, holding, maintaining returns, however only one question in the return has
and licensing of intellectual-, industrial and to be checked and the financial statements should be
similar ownership rights or user rights; submitted with the return.
- Captive insurance;
- Holding company; Transparent company
- Active financing (not being a credit It is possible to request a transparent status. An
institution) of other enterprises or NV, VBA or an AVV may opt, if certain conditions
companies whether or not intra-group; are met, to be treated as a partnership (fiscal
- Investing of funds, except in real estate and transparent company). The fiscal transparent
funds which are put at the disposal of group company is not subject to CIT, unless the fiscal
companies; transparent company carries on a business on
- Exploitation of a company aimed on Aruba through a permanent establishment. The
generating sustainable energy. shareholder could then be subject to CIT
with regard to this permanent establishment.
The Government intends in 2013 to change the
current IPC regime to a more popular tax efficient Dividends distributed by the fiscal transparent
vehicle. The following changes are proposed: company to its shareholder would not be subject to
- A general CIT rate of 10%. For hotels the dividend tax, since due to its transparency, all income
rate would be 10% -15% depending on the and asset and liabilities would be deemed to be
revenue per room; attributed to its shareholder.
- An exemption for dividend withholding tax;
- Abolish certain requirements (e.g. the so- The main requirements for this status is that all
called ‘expert declaration’). the company’s shares must be registered and a
9 notification for the application for this status
San Nicolas tax zone company must be filed with the Tax Authorities within 1
The Government is working on creating in 2013 month after the company has been incorporated.
a special taxation zone in a specific district of the
island (the so-called ‘San Nicolas tax zone’) in The fiscal transparent company does not have to
order to stimulate business there. Although the file (annual) CIT returns. It does have to submit
requirements and benefits are not annually to the Tax Authorities information about the
published as yet, it is the intention that identification of its shareholder(s) and its balance
companies established in this zone would sheet and income statement.
benefit from very favorable tax and other incentives.
Oil refinery or oil terminal regime
Aruba exempt company (AVV) Oil refineries and oil terminals are subject to a tax
The profit of the AVV and the VBA may be rate of 12%. However, under certain conditions, oil
exempted from CIT and dividend withholding tax, refineries or -terminals whose shares are all held
if their activities are limited to one or more of the directly or indirectly by a company listed on a stock
following qualifying activities: exchange recognized by the Minister, are subject to
- Holding of shares or other participation a 7% CIT rate. Under this regime losses may carried
certificates. The exempt company may not forward unlimitedly. Moreover a 0% dividend tax rate
hold more than 5% of low taxed applies to distributions from profits from the opera-
(CIT rate lower than 14%) shares or other tion of an oil refinery or oil terminal.
participation certificates in foreign
companies;
- Financing (not being a credit institution) of
other enterprises or companies whether or
not intra-group;Oil refinery or oil terminal regime Oil refineries and oil terminals are subject to a tax rate of 12%. However, under certain conditions, oil refineries or -terminals whose shares are all held directly or indirectly by a company listed on a stock exchange recognized by the Minister, are subject to a 7% CIT rate. Under this regime losses may carried forward unlimitedly. Moreover a 0% dividend tax rate applies to distributions from profits from the operation of an oil refinery or oil terminal. Aircraft registration Aruba is a category 1 country for the registration of aircraft and very favorable for companies that lease aircraft to third parties as well as for financiers. There are high standards in place which operators must comply with when it comes to evaluating aircraft airworthiness, and flight crew. When an aircraft is registered under the Aruban nationality it may land virtually anywhere. This is why the registration of aircraft under Aruban nationality is very favorable. Also, Aruba has a favorable tax regime in place for this type of business. The Aruba Exempt Corporation (AVV) and/or the transparent company is commonly used as a special purpose vehicle for the ownership or lease of the aircraft and subsequently the registration in the Aruban Nationality Register. For further information please see 10 www.airsafetyfirst.com Trade policy In general, Aruba supports a noninterventionist trade policy. Therefore, trade can be performed with countries globally. In this sense Aruba has some trade agreements that should also make it easier to export your product or offer your services. These agreements may ensure that your company has a competitive advantage.
Caribbean Basin Initiative Association of Caribbean States
Aruba is a beneficiary of the Caribbean Basin Aruba is an associate member of the
Initiative (CBI). The CBI is a trade program Association of Caribbean States (ACS). The
initially launched in 1983 intended to facilitate the primary purpose of the ACS is to be an organization for
economic development and export diversifica- “consultation, cooperation and concerted action” for its
tion of the Caribbean Basin countries. Through the member countries. Its framework provides a forum for
Caribbean Basin Economic Recovery Act (CBERA) political dialogue that allows Members the
of 1983 (amended in 1990) and the Caribbean Ba- opportunity to identify areas of common
sin Trade Partnership Act of 2000 (CBTPA), Aruba interest and concern that may be addressed at the
and beneficiary countries derive duty free entry to regional level, and the solutions for which can
the United States for a broad range of products. be found through cooperation. One of the areas
Moreover, effective October 2000, apparel made in identified by the ACS member states is trade and
the CBI designated countries from U.S. yarns and Economic External Relations. The ACS
fabrics receive NAFTA equivalent treatment and provides a framework for the dialogue and activity
enter the United States free of quota and duty. necessary to further advance economic integration
and intra-regional trade and investment, thereby
Previously excluded products such as certain improving the economic competitiveness of the
footwear, prepared or preserved tuna, petroleum or Greater Caribbean region.
petroleum products, certain watches and watch
parts, and certain handbags, luggage, flat goods, work
gloves and leather wearing apparel receive NAFTA
equivalent treatment.
Trade paragraph OCT
Aruba as an Overseas Country Territory is
eligible for the benefits of the trade paragraph
of the Overseas Association Decision (OAD). The
OAD offers Aruba preferential access of products
11 to the market of the European Union (EU) once
those products comply with the rules of origin.
Government Procurement Agreement
Since adaptations to the schedules for goods
and services need to be refined, Aruba is not a
currently an independent member of the World Trade
Organization. The membership of the Kingdom of
the Netherlands enables Aruba to participate in
WTO deliberations but does not grant the island
independent voting rights. Nonetheless,
Aruba is signatory to the plurilateral agreement
in the WTO that may be of benefit to companies
offering goods, services and construction services to
government buyers. This is the Government
Procurement Act (GPA). The GPA makes markets
of thousands of worldwide government entities
accessible to Aruban suppliers of goods,
services and construction services. The United
States and Canada are both signatories of the WTO’s
Government Procurement Agreement as well,
which gives Aruban suppliers the opportunity to
participate in American and Canadian procurement
markets.4. Types of company structures
Before starting any economic activities in Aruba, entity. At least one managing director must be a
it is important to establish the business and tax resident of, or domiciled in, the island where the
structure. In order to conduct business in NV is established. The powers of the management
Aruba a business license (or a free zone license) and board are set out in the law and in the articles of
registration at the Aruba Chamber of incorporation. The general meeting of its
Commerce are required. Business in Aruba can be shareholders should take place in Aruba. An NV
conducted through a corporation, a branch of a foreign may issue non voting shares. The NV has to issue at
corporation, sole proprietorship, (limited) least one share with any nominal value. The equity
partnership or a (cooperative) association. is not allowed to be negative during the period of
Foreign investors commonly use a corporation for existence. Different classes of shares may be issued,
conducting business in Aruba. for variations in voting rights, participation in profit
distributions and in entitlement to a balance after
Managing director(s) of corporation (the liquidation.
law does not limit the number of managing It is possible for a foreign entity to be transformed
directors) are required to have a director’s into an NV if the law governing that entity does
license, except in the case of a free zone company. not oppose this. The reverse is also possible.
Corporations AVV
In Aruba there are three types of corporate The incorporation of an AVV is generally the
entities of which incorporation are subject to same as the NV. The differences between a NV
approval by the Minister of Justice; a public limited and an AVV are for instance; an AVV can be
liability corporation (commonly referred to in Dutch incorporated by one founder, the founder is not
as 'NV'), the Aruba Exempt Corporation (commonly required to participate in the capital of the AVV,
referred to in Dutch as ‘AVV’) and the limited liability the AVV is legally required to be represented at all
company (commonly referred to in Dutch as ‘VBA’). times by at least one local licensed trust office, the
In practice, a corporation in the international general meeting of shareholders of an AVV can also
financial services industry is incorporated by a take place abroad and an AVV may not conduct a 12
local trust office. After incorporation the shares will credit institution in Aruba.
be transferred to the beneficial owner. Corporate
entities can only have registered shares. Certain The AVV is a company with a special tax regime
compilation and reporting requirements of finan- (see further) which is often used for
cial statements and shareholders registries apply. international tax planning purposes.
The time required to complete incorporation of
a corporate entity and to obtain the necessary VBA
permit licenses varies. A corporate entity can be The incorporation of a VBA is generally the same
incorporated in about two weeks, depending on as the NV. The VBA is considered a flexible and
the complexity of the legal construction. The costs modern legal entity because its incorporator(s)
of incorporation, including licenses range between can choose to keep the VBA as simple or as
USD 5,000 and USD 6,000. In the case of a free complex as deemed necessary. Except certain minimum
zone company, only the costs of the notary apply. information, the incorporators may choose the
items to include in the Articles of Incorporation/
NV Association. The excluded items should be included in
The most common legal form to do business in a rules and regulations (operating agreement) which
Aruba is through the NV, which is a corporate may or may not be attached to the notarial deed.
body with shareholders, and is governed by the Differences with other legal entities are for example:
corporate law and its articles of association. A the VBA can be incorporated by only one founder,
corporation is established by the execution of a it has no minimum capital, it can be converted into
notarial deed. Two founders are required to other (inter)national legal entities and visa versa. (Inter)
incorporate an NV. Non residents can establish an N.V. national mergers and splitting are possible through
by proxy. An NV must have one or more 'managing a VBA.
directors', who can be either an individual or a legal For further information see www.kvk.aw5. Business and Director Licenses
All legal entities require a business license in materials into semi manufactures and/or
order to conduct business in Aruba. The semi manufactures into end products. These
Department of Economic Affairs (DEACI) is industries should be capital intensive with
responsible to issue the permit, except in the case initial investments of at least Awg 1,000,000
of Free Zone companies. To establish a business, (± $ 600,000)
non-Arubans usually need a local partner who • The operation of an exclusive business of,
owns 60% (some exceptions are applicable, such as among others, a well-known brand name
the free zone) of the shares to start a business in (whose products cannot be resold by a third
Aruba. Aruban in this case means someone born in party) or innovative businesses that
Aruba with the Dutch nationality or someone who is contributes to the diversification of the
considered local. People who are considered local in Aruban economy.
this case mean: • Specialist operations that create high quality
• a Dutch national, born outside Aruba bu jobs that are not available on Aruba. At least
who has been residing at least five 80% of the employees should have a higher
years in Aruba and is in the possession of an level of professional and intellectual
admission permit for an indefinite period of capability.
time. • Business activities that are concentrated in
• a Dutch national of whom at least one the San Nicolas area. This includes activities
parent was born in Aruba to stimulate and/or revive the downtown
• a Dutch national who has been married to and surrounding areas of San Nicolas as well
an Aruban for at least one year and has been as its service-related activities. This license is
residing in Aruba for at least three years; site-specific for a period of at least 5 years.
• a Dutch national who is married to an
Aruban for at least three years and has For further details on the above foreign ownership
been residing in Aruba for at least one year; exclusion rules refer to
• someone not born in Aruba and not having http://www.arubaeconomicaffairs.aw/
13 the Dutch nationality but who has been
married to an Aruban for at least five years Director’s License
and has been residing in Aruba for at least In addition to a business license, company
three years. directors who are not born in Aruba, and hold the
• a local person can also be someone, not Dutch nationality, should apply for a director’s
born in Aruba and not having the Dutch license at the Department of Economic Affairs. The
nationality but who has been residing in director license is requested in conjunction with
Aruba for ten years or more, and is in the the business license. For the list of documents
possession of an admission “admission required for the business license and director license
permit for an indefinite period of time” or “a refer to http://www.arubaeconomicaffairs.aw/
statement of admission by operation of the
law”;
Note that the 60% ownership rule is no longer
applicable for a foreign established Corporation,
Aruba domiciled Corporation, Limited Liability
Company or Aruba Exempt Corporation for the
following cases:
• Construction, expansion and/or renovation
of a hotel or a government project for which
an international tender is required or
obligatory.
• Operation of a hotel or casino.
• Establishment of environmentally friendly
processing industries e.g. high
technological level or processing of raw6. Tax Structure
Corporate income tax treatment. The normal CIT tax rate for
Resident companies are taxed on their international shipping and aviation activities for
worldwide income. Non-resident companies are example is approx. 8%.
taxed on the following Aruba source income:
- profits allocated to a permanent Further, for certain business activities Aruba
establishment or permanent representative has certain special tax regimes (see further).
in Aruba;
- profits from real estate located in Aruba; Individual income tax
- profits on loans secured by a mortgage on Income tax is levied on residents and non
real estate located in Aruba. residents who receive certain Aruba source
income (e.g. managing director’s salary of a resident
The place of residency of a taxable entity is company, income from real property in Aruba or
determined by the following circumstances. If dividend and profits on sale of shares of a substantial
the aforementioned entities are managed and interest holder of a resident company).
controlled in Aruba, they will in principle be deemed Residency for tax purposes is determined by the factual
to be resident in Aruba. If the legal form of an circumstances (place where the center of the
entity is governed by the Aruban law, then its place of vital interest is, e.g. the location of an individual’s
residency will be considered continuously to be in permanent home, their habitual place of
Aruba. actual residence, and their centre of economic
The corporate income tax (CIT) rate is 28% and it and social interest). Residents who leave Aruba
is levied on the income of residents and non-resi- temporarily but not longer than one year will
dents (branches) as reflected in the profit and loss be deemed to have been resident all the time.
statement less any allowable deductions based
on Aruba tax- and case law. Branch income is in Interest received from savings accounts from
principle determined according to the separate local and international credit institutions
entity approach. The transfer of profits to the head are tax free. Capital gains are not taxed in
14
office is not subject to taxation. Transfer pricing Aruba, unless the gain results from business
rules (incl. documentation obligation) applies on activities or from the sale of shares in a company
related party transactions. For profits realized from in which the individual has a ‘substantial interest’.
the sale of assets, it is possible to create a so called Tax payers can deduct in principle all expenses
‘replacement reserve'. Replacements should in related to the acquisition, collection, retention of
principle occur within four years. a source income, except for employment income.
Profits and losses derived from a qualifying For employment income a standard deduction of
participation are not included in the tax base 3% of the wage (max. AWG 1,500) per year applies.
(participation exemption). The participation Rates:
exemption applies to dividends as well as to capital - The income tax rate is progressive. The
gains. maximum tax rate is 58.95%.
- Dividends and profits on the sale of shares
Profits generated by a permanent forming a substantial participation are taxed
establishment in a foreign country are exempt. at a flat rate of 25%.
Income derived from foreign real estate is also exempt. - For certain types of one time income, a
Insurance companies and branches thereof in Aruba special tax rate of 15% or 25% is available.
are subject to a different profit determination
method. The Government intends to introduce in 2013 an
expat regime with certain tax incentives.
Net operating losses may be carried forward
for five years. Carry back of losses are not
permitted nor the unlimited carry forward of start
up losses (except for certain special regimes).
Shipping and aviation companies are subject
to a different and generally quite favorable taxWage tax (pay as you earn income tax) deferred and losses may be offset with
Wage tax is levied on the employment income profits of other companies within the fiscal unity.
of a (non) resident individual and is a pre-levy Advantage of this facility in the TOT is that
to the individual income tax. Non-residents are intercompany transactions are not taxed. Overall
subject to wage tax only if the employment is fulfilled in advantage of this facility for both CIT and TOT, is that only
Aruba or wage is received from a former employment the local ‘mother’ company should file the tax return.
fulfilled in Aruba. Wage tax has to be withheld as
soon as an employment exists, and the employer Other significant taxes/ levies
is the withholding agent for the wage tax and the - Import duties: The tariffs vary between
social security premiums. If employment income 0%-57% on import of goods. For ‘green’
involves a foreign employer, this employer only products (e.g. solar panels) and ‘green’
has to withhold wage tax if the employer has a appliances’ (e.g. with ‘ENERGY STAR’ label)
permanent establishment in Aruba or if it has been the import duty is 2%.
appointed by the Tax Authorities as - Real property tax (land tax): The tax rate is
withholding agent. The wage tax rate is equal to the 0.4% of the registered value of the real
individual income tax rate and is based on a progressive estate minus a general exemption of AWG
system. 60,000. Exemption applies in certain cases.
- Property transfer tax: The rate is 3% or 6%
All benefits (in money and in kind) received and is levied on the fair market value of the
from employment are part of the taxable wage. real property transferred.
Allowances (in money or in kind) to cover - Foreign Exchange commission: the rate is
expenses for the appropriate fulfillment of one’s 1.3% on the payment abroad (e.g. also if
employment are, under certain conditions, not payment is made/settled from a foreign
regarded as wage. Certain fringe benefits are also tax account of resident).
free. - Inheritance- and gift tax: The rate is
progressive and ranges from 2% to 24%,
Dividend tax depending on the degree of kinship and the
A dividend withholding tax is levied on all value obtained (e.g for the spouse, the
15 (formal and non-formal) dividend distributions of children and grandchildren of the deceased,
Aruba-resident entities. The tax rates are: the maximum rate is 6.0%). Local real
- 10% property obtained as an heir or legatee or
- 5% in case of dividends distributed to as a gift from a non resident is taxed at 8%.
residents of another country within the - Tourist levy: The rate is 9.5% of the lodging
Kingdom of the Netherlands who are subject compensation. Time share units have a fixed
to a profit tax rate of at least 5.5% or in case tax base depending on the type of unit.
the shares of the distributing or the - Travel promotion levy: USD 10 on each travel
receiving company are for at least 50% listed ticket to Aruba.
at a qualified stock exchange. - Environmental levy: The Government
- 0% in case the participation exemption intends to introduce this levy in 2013. For
applies. now the levy amounts for rental cars: USD
1 per day, for regular hotels: USD 3 per
Turnover (‘sales’) tax night/per room, for time share resorts USD
In Aruba a turnover tax (TOT) is levied on the 10-USD 25 per stay depending on the unit
sale of products and services rendered. Certain type.
transactions are tax exempt. The rate is 1.5%.
Import and exports are exempt.
Fiscal unity CIT and TOT
It is possible to form a fiscal unity for CIT- and TOT
purposes.
Advantages of this facility in the CIT are that
the recognition of inter company profits may beInvestment incentives
A number of investment incentives have been
devised to stimulate prospective investors to start
new business ventures. For all businesses the
following fiscal incentives are available:
- Accelerated depreciation investments of
industrial enterprises with a value higher
than Awg 90mln;
- Investment allowance of 6% on certain
investments. If the investments are
alienated within 6 years after the year of
the investment, a disinvestment addition
should be included to the taxable income
of the year of the disinvestment and the
following year.
Tax treaties
Among Aruba, Curaçao, St. Maarten and the
Netherlands there exists a tax arrangement,
the so called 'Tax Regulation for the Kingdom'.
Aruba has several Tax Information Exchange
Agreements (TIEA) among others with certain
Caribbean islands, United States, Spain and
Scandinavia. Aruba is on the white list of the OECD
Global Forum. Aruba does not have double taxation
treaties.
167. Banking & Finance
Central Bank of Aruba person authorized to sign. For Aruban
The Central Bank of Aruba (CBA) is a legal citizens a valid passport, driver’s license or
entity in itself within the public sector. The principal Aruban identification card can be used. For
tasks of the CBA, as stipulated in the Central Bank persons not residing in Aruba, two valid
Ordinance, are: identification documents are required.
• Conduct monetary policy; • For persons not residing in Aruba two
• Supervise the financial system; reference letters from two different
• Issue bank notes; well-known banks addressed to the bank
• Issue coins on behalf of the government; where the account will be opened.
• Act as the banker for the government; • Transactional profile form for the anticipated
• Be the central foreign exchange bank and, activity and nature of transactions on the
as such, to regulate the flow of payments to account. Each bank will have the form to be
and from other countries; and to advise the filled out requesting this information.
Minister of Finance on financial matters. • Signature card(s) to be signed by account
The CBA has supervision authority over holders for authorization signature
entities which provide financial and certain non- verification.
financial services. The CBA is, among other things, • Customer data form that includes official
responsible for control and regulation of the address of customers’ residence, legal name,
banking and insurance businesses One of its most other contact information and mailing
important objectives is to maintain the external address among other information required
stability of the Aruban guilder and to take care of from persons authorized on the account.
the efficient functioning of the financial system. • Source of Funds Declaration for initial
For more information, please see www.cbaruba.org deposit if applicable.
Local banking sector Legal Entity (Cooperation, Limited Liability Com-
The Aruban florin is pegged to the US dollar, which pany, Foundation and Association):
17 facilitates international payments and US dollar • An original extract from the Chamber of
accounts may be opened. The local credit Commerce no later than 3 months.
institutions are well equipped with trust, • Certificate of Incorporation and Articles of
insurance, and investment departments that provide Association.
local and international services. Local banks may be • Copy of the business license and (if
subsidiaries of foreign banks, and work applicable) director’s license.
closely with corresponding foreign banks. • Identification of shareholders along with
The leading local credit institutions are: shareholders’ register and ultimate
- Aruba Bank N.V. beneficiary owners.
- Banco di Caribe (Aruba) N.V. • Depending on nature of business the bank
- Caribbean Mercantile Bank N.V. may request copies of other legal documents
- RBC Royal Bank (Aruba) N.V. to ensure the company has been legally
- established and its representative have due
Opening a Bank Account power.
Opening a bank account is an integral part of doing • Names and signatures of officials authorized
business. Based on the requirement of the Central to sign by their capacity for the company.
Bank of Aruba, licensed financial institutions are Proof of identification is also required for
required to adhere to the “know your client” policy. proxies.
Account holders can open a joint bank account with • Transactional profile form of the anticipated
multiple persons or a company account granting activity and nature of transactions on the
proxy for signing. account. The bank will have the form to be
filled out requesting this data.
Minimum requirements for opening a current • The bank may have additional requirements
account Individual: in order to comply with the “know your
• Valid identification document for each customer policy”.Offshore Banks
Aruba has two offshore banks:
• Citibank Aruba N.V.
• BBA Bank N.V.
Aruba Investment Bank
AIB’s services and products can be divided in the
following three categories:
• Corporate lending
• Program & project management
• The Aruban florin is pegged to the US dol-
lar, which facilitates international payments and
US dollar accounts may be opened. Economic &
financial advisory services
For more information refer to www.aib-bank.com
Anti-Money Laundering
Aruba is proud to meet with international anti-
money laundering standards. Aruba has a Report-
ing Center where any unusual transaction which is
contemplated or has taken place must be reported
by anyone who renders financial services as well as
specific other businesses.
188. Capital Transfer
Capital transactions are subject to approval by the There are no restrictions on current foreign
Central Bank of Aruba. Current transactions (e.g. exchange payments. These current foreign
in- and outbound interest payments) are not exchange payments and receipts include purchase
subject to approval. The State Ordinance on Foreign or sale of goods (import or export of goods), travel,
Exchange Transactions (SOFET) are set procedures to transport of passengers and goods, purchase or sale
monitor the flows of foreign exchange into and out of of other services (i.e. communication, construction,
the country. There are certain restrictions on capital computer and information services,
transactions that apply. The guidelines are as follows: performance of work and services, insurance services,
• A general license is granted to resident membership and management fees). Note
companies excluding commercial banks and that the following points must be considered.
institutional investors to execute capital • Residents can make payments with regard to
transactions up to a maximum of Awg the dividends and profits under the following
750,000 (Awg 300,000 for individuals) or the conditions:
equivalent foreign currency per year. Capital • A license for the sale of domestic shares has
Transactions are considered to be the been granted; and
following: • A written acknowledgement with respect
to the amount of the dividend and profit has
• Loans to and from non-residents; been granted by the CBA (Central Bank of
• Investments in: inter alia, real estate, stocks, Aruba)
shares, bonds, debentures, bank deposits • A request for acknowledgement of intended
and; dividend distribution or profit transfer must
• Transfers to and from Foreign Bank Accounts be filed with the CBA in writing on
(FBAs) and Foreign Inter-company Account submission of the relevant annual financial
(FIAs). statements and the shareholder’s resolution.
• A special license is required when the • A special foreign exchange license has to be
amount exceeds the maximum of Awg obtained from the CBA in order to execute
19 750,000 (Awg 300,000 for individuals) or foreign payments with respect to interest
the equivalent foreign currency per calen and repayments on all type of foreign loans.
dar year. The requirements to request the
special license are divided based on the
categories as follows:
1. The placement of bonds by resident
companies to non-residents.
2. Establish and/or provide a foreign loan(or an
intercompany accounts-current accounts)
3. Foreign investments by residents(including
purchase of foreign bonds)
4. Participation in the capital of non-residents
and participation by non-residents in the
capital of residents.
5. Purchase or sale of a property
6. Change of residency
7. Transfers to and from private offshore
account
8. Transfer of profit/(interim) dividend by
resident company to non-resident
shareholders
For further details refer to www.cbaruba.org for the
document required.9. Labor-, Social Security- and Pension
Regulations
General considerations Compulsory pension
Currently legislation is being All employees are required by law to be insured
finalized to modernize Aruban labor laws. The for a private pension. The pensions insurances of
information below is based on the current situation. normal employees should be insured at local insurance
companies and company pension funds.
The labor force on Aruba is estimated at Shareholders who also manage their own
approximately 55.000. There are statutory mini- companies can build up their pension
mum wages for workers aged 18 years and older. within the company. Employers are required to
The present monthly entry level minimum wages, by contribute to the pension plan as well. The minimum
category (not including benefits) in 2013, based on pension premium at the moment is 4% divided
a 40 hour workweek is AWG 1,636.70 (USD 914,35) equally between the employer and the employee.
for business and AWG 763.55 (USD 428.96) for For 2014 the minimum premiums will become 6%.
domestic personnel. The standard legal working
hours are normally 8 per day and 40 per week. At
least 15 working days' annual vacation must be given
with pay, and 11 paid public holidays are also granted.
Labor agreement
The labor agreement is the contract
whereby one party, the employee
undertakes to work for the other party, the
employer, against pay, for a certain time employment.
Collective labor agreements usually cover a 20
period of two to three years, after which new terms
are agreed upon for a similar period of time. The
reliability provided by these contracts benefits
both the employer and employee. In most cases
there is a clause which provides for no strikes or
lockouts during the contract period. All labor disputes
where parties do not reach an agreement must be
subjected to mediation. Parties may request
intervention, or the mediator can ex-officio
compel parties to accept mediation. The government
has the authority to impose a 'cooling off' period.
Social security regulations
Non-resident individuals who are not registered
in the Aruban municipal register of Aruba are not
subject to the social security premiums
(including health insurance, old age benefits, widows
and orphans insurance premiums). For those who are
qualified as insured persons, the social security’s
premiums varies between 25% and
28%), of which the employee pays
approx. 6% and the employer pays up to 22%.10. Visa and Immigration Policy
LIVING AND WORKING IN ARUBA b. An alien who is eligible for a license in
A residence permit is required for every accordance with the guidelines of the
foreigner who wants to become a resident of Aruba. An National Ordinance of Establishment of
applicant for admission as a resident must, Companies; who owns shares with a
among other things, provide information on his value of at least AWG. 125,000,00;
application form on how he will support himself and c. An alien who is not eligible for a license in
accompanying dependents. accordance with National Ordinance of
Establishment of Companies, but who is in
In addition to an admission permit, a foreigner possession of at least 40% of the shares
who wants to exercise a profession or take up issued capital of a company established in
employment must also have a work permit. The Aruba with a value of at least AWG.
work permit will only be granted if there are no 50,000.00.
suitable qualified local/Aruban persons available.
Generally, a request for a work permit will only be License holders as investors are considered
taken into consideration if it is filed through a local to be exempt from the labor markets review
employer who is willing to accept full responsibility of the DPL (Labor Department) and can apply
for any possible expenses related to the employee. directly at the DIMAS. For further information refer to
http://dpl.aw and www.dimasaruba.com
Investors
A special category of permit is created for DURATION OF ADMISSION
potential investors whose investments have a Anyone wanting to stay longer than 180 days in
significant impact to the island through Aruba will need a residence permit and will not
socio-economic value added to the Aruban be considered a tourist. If a tourist wants to stay
economy. longer then the number of days granted by the
immigration officer on the ED-card upon
admission, he or she can apply at the office of
21 Investors are considered: Dimas for an extension for up to 180 days if
a. CEO and CFO of a company that has an applicable. The requirements and
annual turnover of at least AWG. form to apply for a tourist stay be
10,000,000.00; downloaded from www.dimasaruba.comWhere and how to apply for a visa • The necessary documents for returning to
Visa-required tourists need to apply for and have the country of origin or to a country that he
a visitor visa before coming to Aruba. The visa has the right to enter, for example a valid
must be applied for in person at an embassy or residence permit (temporary or permanent),
consulate of the Kingdom of the Netherlands a re-entry permit or a (entry) visa;
(diplomatic mission). In some countries certain • If so requested, the tourist has to be able to
approved travel agencies can apply for a visa on prove to the satisfaction of the immigration
behalf of their customers. For address infor- officer that he has a valid reservation for an
mation and websites of Dutch diplomatic mis- accommodation in Aruba (e.g. hotel or
sions abroad, visit the website of the Min- apartment) or that he owns property in
istry of Foreign Affairs, www.mfa.nl/en. Aruba (a residence, condominium,
apartment, timeshare apartment or a
REQUIREMENTS FOR ENTRY INTO ARUBA pleasure yacht moored in Aruba with a
length of at least 14 meters measured on the
AS A TOURIST water line);
Persons who are considered a tourist are those
• If so requested, the tourist has to be able to
who travel to Aruba for one of the following
prove to the satisfaction of the immigration
purposes: vacation and relaxation, sport, health
officer to dispose of adequate financial
reasons, family matters, study, religious purposes or
means to provide for hotel expenses (if
a business visit. During their stay in Aruba tourists
applicable) and living expenses during his
are not allowed to work.
stay or that he has a declaration of
guarantee from a legal resident of Aruba.
Upon arrival in Aruba a tourist must have:
• A passport that is valid upon entry and for
The final authorization for admission to Aruba
the duration of stay in Aruba. If the tourist
remains with the immigration officer at the
holds a passport from a visa required
border-crossing/port of entry. The immigration
country (List A- refer to the Dimas website),
authorities at the border-crossing/port of entry
he must have a valid visa sticker in his
have the authority to grant or refuse admission.
passport;
Admission can be refused if not all admission 22
• A completely filled-in and signed
requirements are fulfilled by the time of
Embarkation and Disembarkation card (ED-
entering Aruba or if the tourist has been blacklisted.
card);
• A valid return- or onward ticket;11. Practical Information
1. Registration at the Civil Registry b. Corporations
Registration at the Civil Registry (Censo) is The important taxes on corporations are
required after a residency and work permit is profit tax (“winstbelasting”) and company
granted by the Minister of Integration, Infrastructure turnover tax ("belasting op
and Environment through DIMAS. By doing this one bedrijfsomzetten" or BBO). The BBO rate is
becomes a legal resident of Aruba. 1. 5%.
Requirements for registration The tax is levied on the turnover that the
company realized with the providing of goods and s
• A valid passport ervices. Also, Aruban tax law offers a system that
• A notarized birth certificate eliminates double taxation of cash payouts from a
• A visa is required for some countries of corporation to its shareholders ("dividendbelasting"
origin (refer to www.dimasaruba.com for and "imputatiebelasting"). Refer to ‘Tax Structure’
country list) section.
• A residency and work permit
• If married: an extract of the marriage 4. Social Premiums
certificate Social premiums are levied in connection with the wage
• If divorced: an extract of the divorce tax. Aruba knows five different social security taxes.
certificate 1. General health insurance (AZV)
• A completed and signed embarkation/ 2. Old age, widow and orphan pension (AOV/
disembarkation card AWW)
3. Sickness insurance (SVb)
In addition, for nationals of The Netherlands, the 4. Accident insurance (SVb)
following documents are also requirements for 5. Cessantia insurance (SVb)
registration at the Civil Registry in Aruba:
23 a. General health insurance (AZV)
• Proof of deregistration from the Civil Registry The total premium amounts to 11.5% which
in The Netherlands premiums are due up to a maximum wage
• Extract from the birth register of Awg. 85,000 (US$ 47,486). The total
premium is divided between the employer
2. Registration at General Health (8.9%) and the employee
b. Old age, widow and orphan pension (AOV/
Insurance (AZV)
AWW)
Everyone registered at the Civil Registry is by law
The total premium amounts to 13.5% which
insured by AZV, and required to contribute to the
premium is up to a maximum wage of Awg.
AZV insurance premium if they have an income
65,000 (US$ 36,313). Of this premium, 12.5%
on which they pay income tax or the AOV/AWW
is for the AOV and 1% is for the AWW. The
premiums. These premiums are related to the
total premium is divided between the
old age, widow and orphan pension. For further
employer (9.5%) and the employee (4%).
registration details refer to www.azv.aruba.
The employer can however pay the employees’
3. Taxes part of the premiums tax exempt. The AOV/AWW
Aruba's fiscal system consists of taxes on premiums are only due until the employee reaches
corporations and individuals. the age of 60.
a. Individuals c. Sickness insurance (SVb)
The most noteworthy of the individuals' The premium amounts to 2.65%, which
taxes are wage (“loonbelasting”) and income premium is due up to a maximum wage of
(“inkomstenbelasting”). Refer 'Tax Structure’ Awg 54,600 (U$30,503). This premium is
section. only paid by the employer.d. Accident insurance (SVb) attention should be given to the purpose
The premium varies between 0.25% and 2.5%, of the property to ensure that the specific
depending on the risk of work performed by the commercial activity can executed on the location.
employee and up to a maximum wage
of Awg 54,600 (US$ 30,503). This 8. Education
premium is also only paid by the employer. The educational system is based on the
Constitution of the Kingdom, which also applies to
e. Cessantia insurance (SVb) Aruba. The language of instruction is Dutch in the
The premium amounts to Awg. 40.00 (US$ 22.47) primary education, secondary education,
per employee per year. The cessantie is paid out vocational and university system. Higher education
upon dismissal of the employee by the employer. option includes University of Aruba (www.ua.aw)
If the dismissal is due to acts of the employee, no and Instituto Pedagogico Aruba (www.ipa.aw). The
cessantia is due. University of Aruba also has programs in English. For
more information on the Aruban education system
5. Vacation refer to www.ea.aw.
The Vacation Ordinance (“Vakantieverordening”) There are also private educational institutions. The
regulates the minimum number of vacation days following are English language educational programs:
an employee is entitled to per year of continued • The International School of Aruba
employment by the same employer. (www.isaruba.com) offers an
American-based curriculum from
Every employee is entitled to an amount of kindergarten through high school.
vacation days equal to at least 3 times the contracted • Xavier University Xusom School of Medicine
number of working days per week with the (http://edu.xusom.nl/) offers pre-medical,
understanding that an employee who works 6 days a medical and nursing programs.
week is entitled to at least 15 vacation days per year. • Aureus University School of Medicine
(http://www.aureusuniversity.com/aruba/
6. Holidays campus/) offers medical programs.
There are 11 national public holidays in Aruba per year.
9. Legal System 24
New Year's Day January 1 Aruba falls under the jurisdiction of The
Betico Day January 25 Common Court of Justice of Aruba, Curaçao, St.
Carnival Monday Monday before Maarten, and Bonaire, St. Eustatius and Saba
Ash Wednesday (“Gemeenschappelijk Hof van Justitie van
National Anthem & Flag Dag March 18 Aruba, Curaçao, St. Maarten, en van Bonaire, St.
Good Friday Eustatius en Saba”), which is located in Curaçao.
Easter Monday
Queen's Day* April 30 *Kings Day- April 27 This Common Court of Justice is the highest court in
(2014 & Beyond) Aruba and the court of appeals for cases that were
Labor Day May 1 heard in the first instance by the Court of First Instance
Ascension Day of Aruba (“Gerecht in Eerste Aanleg van Aruba”).
Christmas Day December 25
Boxing Day December 26 The Court of First Instance of Aruba is the
competent authority for all civil,
7. Property administrative, and criminal cases. Cases in the first
Any nationality can own property on the island. For instance are heard by a single judge, whereas cases on
commercial activity the type of property used can appeal are heard by a three-judge panel. Judgments
be long-lease and private land. The legal transfer entered on appeal by the Common Court of
of property ownership goes through a notary. See Justice can be appealed in cassation to the Supreme
list of notaries in the appendix. Fees apply during Court (“Hoge Raad”) of the Netherlands, the highest
property transfer. Note that the transfer tax judicial organ within the Kingdom of the
applicable is 3% for properties valued at less Netherlands. For further information refer to
than Awg 250,000 and 6% applicable for those www.ova.aw.
properties valued greater than Awg 250,000. SpecialYou can also read
