In 2009 it was announced that Aruba was no longer on the Organization for Economic Cooperation and Development's tax haven blacklist or its 'grey list' of jurisdictions with too few exchange of information treaties. However, the Financial Action Task Force's subsequent report on Aruba and its plans for a new blacklist have prompted the government to propose rigorous changes to the existing system.
In September 2006 the Aruban government presented its plan for a form of Aruban limited liability company, known as a vennootschap met beperkte aansprakelijkheid. Parliament has now finally approved legislation on the new corporate entity. Simple and flexible, it promises to be particularly useful for tax planning.
A new ordinance on the supervision of trust companies has entered into force following the redrafting of provisions that would have brought almost every company in Aruba under the supervision of the Central Bank. The ordinance introduces the 'know your customer' principle to prevent Aruban entities from being abused for criminal purposes.
Aruba's new turnover tax was introduced with effect from January 2007 as part of a shift from direct to indirect taxation. However, certain accompanying amendments, including the introduction of a definition of a 'permanent establishment' for wage tax and profit tax purposes, followed much later and have greatly increased the administrative burden on entrepreneurs.
Proposed legislation on tax and social security liability creates additional liability for contractors and subcontractors - a contractor may be liable not only for its own wage tax and social security premiums, but also for those of its subcontractors and all of the subcontractors in the same chain. The legislation will also establish liability where temporary employees are hired from an agency.
A new form of limited liability company, designed to be simple, multi-purpose and suitable for tax planning, is expected to be introduced at the beginning of 2008. The new form facilitates company restructuring and is designed to improve the investment climate for local and international investors.
The Aruban government has introduced a new turnover tax and amended other tax ordinances relating to, among other things, cuts in corporate and personal income tax, profit tax and import duties. The amendments mark a shift from direct to indirect taxation and will have a major impact on the way Aruban entrepreneurs do business.
Changes to Aruban tax rules have further restricted the limitation of deduction of interest and other payments. Aruba exempt companies (AECs) engaged in certain activities enjoy an exemption from Aruban profit tax and dividend withholding tax. Existing AECs and offshore regimes, as well as newly incorporated AECs and Aruba public limited liability companies, may also opt for fiscal transparency.
As an associated territory of an EU member state, Aruba has passed new legislation equivalent to the EU Savings Tax Directive. The amendment to Aruba's General Tax Ordinance modifies the taxation of savings income in the form of interest payments. Additional changes to the tax arrangements with the Netherlands and the Netherlands Antilles will facilitate the automatic exchange of information.
Aruban tax law is currently being overhauled. Amendments to the legislation on Aruba exempt companies and the introduction of so-called 'check the box' rules for fiscal transparency are imminent. In addition, technical amendments to the country's free zone legislation will take effect on January 1 2006.
The new US-Aruba Tax Information Exchange Agreement aims to facilitate the exchange of information with respect to taxes, enable cooperation in the prevention of financial crimes and combat terrorism through the sharing of information. This update outlines the content of the agreement and some general aspects of Aruban domestic legislation on the exchange of information.
The United States and Aruba have exchanged diplomatic notes bringing into force the tax information exchange agreement signed in 2003. Aruba will now be considered part of the 'North America area' for the purposes of determining whether US taxpayers may deduct expenses incurred in attending conventions, business meetings and seminars in Aruba.
The Office of the High Commissioner of Aruba recently gave a presentation to the members of the Aruba Financial Centre Association and the Aruba Association of Tax Consultants on proposed amendments to legislation concerning the Aruba exempt company and the proposed introduction of a new Aruba legal entity.
The Fringe Benefits Regulation, which sets guidelines for the taxation of monetary benefits and benefits in kind earned by employees, was recently amended. The revised regulation explains the allowances available to employees located from abroad and those available to all employees working in Aruba.
The government of Aruba has adopted a bill containing an amendment to the Foreign Exchange Tax Ordinance. Among other things, the bill entitles the Central Bank of Aruba to levy foreign exchange tax in case of an incorrect calculation of the foreign exchange tax by a foreign exchange bank, exchange office or other resident.
Including: Amendments to the Profit Tax Ordinance; Dividend Tax and Imputation Payment Ordinance; Imputation Payment System; Income Tax Treatment of Individuals Resident Abroad.