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Aruba
Aruba
The individual's liability to income tax is determined on the basis of residence. There are two possibilities: resident or non-resident (but receiving specific Aruban source income). The tax is based on the net income and calculated against a progressive rate.
Key message
The key tax consideration for Aruba will be whether the business traveler is a resident or not. If the business traveler is a resident the question is whether the expatriate regulation - which provides in a favorable income tax regime for expatriates - applies.
Introduction
The individual’s liability to income tax is determined on the basis of residence. There are two possibilities: 1) resident or 2) non-resident but receiving specific Aruban source income. The tax is based on the net income and calculated against progressive rates. Non-residents are subject to the same tax rates as residents but they are not entitled to any personal allowances or deductions.
Income Tax
Liability for income tax
The individual’s liability to income tax is determined on the basis of residence. The residence will be determined by facts and circumstances and the main question is where the centre of the individual’s vital interests is located.
Tax trigger points
If the employer of the business traveler is a resident of Aruba or is a branch or permanent establishment in Aruba, there may be liability for wage tax purposes.
Types of taxable income
If the individual qualifies as a resident for purposes of the Aruba Income Tax Ordinance, tax liability relates to income from real estate, from movable assets, from business and employment as well as from rights on periodic payments. If the individual is a non-resident, Aruba calculates source taxes on specific income like employment income, unless a treaty provides otherwise.
Tax rates
The progressive tax rates in the income tax are as follows:
| Number | Income brackets | Rate group 1 | Rate group 2 | |||
|---|---|---|---|---|---|---|
| I | II | III | IV | V | VI | |
| 1 | - | 7.296 | - | 7,00% | - | 7,40% |
| 2 | 7.296 | 17.177 | 510,72 | 9,55% | 539,90 | 10,05% |
| 3 | 17.177 | 28.243 | 1.454,36 | 13,70% | 1.532,94 | 14,45% |
| 4 | 28.243 | 40.883 | 2.970,40 | 18,00% | 3.131,98 | 19,00% |
| 5 | 40.883 | 54.930 | 5.245,60 | 23,50% | 5.533,58 | 24,80% |
| 6 | 54.930 | 70.665 | 8.546,65 | 29,00% | 9.017,24 | 30,60% |
| 7 | 70.665 | 85.093 | 13.109,80 | 34,10% | 13.832,15 | 35,95% |
| 8 | 85.093 | 100.640 | 18.029,75 | 38,00% | 19.019,02 | 40,10% |
| 9 | 100.640 | 120.462 | 23.937,61 | 41,75% | 25.253,37 | 44,05% |
| 10 | 120.462 | 149.079 | 32.213,30 | 43,20% | 33.984,96 | 45,60% |
| 11 | 149.079 | 191.343 | 44.575,84 | 46,25% | 47.034,31 | 48,80% |
| 12 | 191.343 | 256.697 | 64.122,94 | 52,00% | 67.659,14 | 54,85% |
| 13 | 256.697 | 304.369 | 98.107,02 | 54,20% | 103.505,81 | 57,20% |
| 14 | 304.369 | - | 123.945,24 | 55,85% | 130.774,19 | 58,95% |
Social security
Liability for social security
There is a liability for the AOV (general old-age insurance), the AWW (general widows and orphans insurance) and the AZV (general health insurance), unless a treaty provides otherwise.
| AOV/ AWW |
Employee | Employer | Total | Employee | Employer | Total | Maximum premium base |
| 2017 | 5,0% |
10,5% |
15,5% |
4.250 |
8.925 |
13.175 |
85.000 |
| AZV | Total rate | Surcharge employer | Maximum premium income | Maximum premium |
| 2017 | 10,5 | 8,9 | 85.000 | 8.925 |
Compliance obligations
Employee compliance obligations
If income tax is due to an amount exceeding wage tax withheld during the calendar year, filing an income tax return to the inspectorate of taxes is obligatory. Any wage tax withheld is credited against the final income tax liability.
Employer reporting and withholding requirements
Payment of the taxes withheld by the employer at wage tax return within fifteen days after the end of the tax period is obligatory.
Other issues
Double taxation treaties
BRK (Tax regulation for the Kingdom of the Netherlands). Aruba also has several tax information exchange agreements (TIEAs) with other countries.
Permanent establishment implications
If the business traveler works for a permanent establishment in Aruba, the employer is obliged to withhold wage tax.
Indirect taxes
BBO 1,5% and 2% health levy (the rate of the health levy has increased from 1% to 2% as of July 8, 2015).
Transfer pricing
The arm’s length principle is applicable on all transactions between affiliated companies (e.g. management fees and remunerations for other services provided, interest on loans, etc).
Work permit / visa requirements
Work permit required/Visa required
Local data privacy requirements
Yes
Exchange control
Yes, by Central Bank of Aruba
Non-deductible costs for assignees
Workspace, personal care etc
Other
Not applicable
© 2019 Meijburg & Co Caribbean, Tax Lawyers, is an association of limited liability companies and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
