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Aruba - Indirect Tax Guide

Aruba - Indirect Tax Guide

Explore the requirements and rules that apply to Indirect Taxes in Aruba.

Explore the requirements and rules that apply to Indirect Taxes in Aruba.

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General

Types of indirect taxes (VAT/GST and other indirect taxes).

  • Turnover tax.
  • Health levy.
  • Levy on additional provisions for public-private partnership projects (BAVP).

Are there other indirect taxes?

Additionally, there are minor, case-specific indirect taxes such as an excise tax, stamp duty, registration duty, transfer tax, land tax for real estate and room tax.

What supplies are subject to VAT?

The sale of goods and rendering of services are subject to turnover tax, health levy and BAVP.

What are the standard or other rates (i.e. reduced rate) for VAT/GST and other indirect taxes?

  • 1.5 percent turnover tax.
  • 3 percent health levy.
  • 1.5 percent BAVP.

VAT/GST registration

Who is required to register for VAT/GST and other indirect taxes?

Entrepreneurs and enterprises carrying out a business, provided they are collecting revenues from the sale of goods and/or the rendering of services in Aruba.

Is voluntary registration for VAT/GST and other indirect taxes possible for an overseas company (e.g. if the annual turnover is below the relevant VAT/GST and other indirect taxes registration threshold)?

No, in terms of the turnover tax, health levy and BAVP. Based on the applicable legislation, overseas companies can only register for turnover tax, health levy and BAVP if the company is subject to those taxes in Aruba, meaning they are registered taxpayers. In specific cases, an overseas company might be subject to turnover tax, health levy or BAVP in Aruba for services rendered or goods delivered without the presence of a permanent establishment in Aruba.

Are there any simplifications that could avoid the need for an overseas company to register for VAT?

As a result of the recently introduced reverse-charge mechanism, foreign companies are not required to register in Aruba for VAT, since the customer established in Aruba has the obligation to file the VAT tax return.

Does an overseas company need to appoint a fiscal representative?

Not applicable.

Which forms and supporting documentation does an overseas company need to submit for VAT/GST and other indirect tax registrations?

Not applicable.

Is grouping* for VAT/GST and other indirect taxes possible?

Yes.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

Monthly.

What are the exchange rate rules in your country?

The following fixed exchange rate applies between the Aruban florin (AWG) and the US dollar (USD): USD1 = AWG1.79.

International Supplies of Goods and Services

Exports – Goods

How are exports of goods treated?

Exports of goods are not taxed with BBO/BAZV and BAVP. Only goods delivered in Aruba are subject to indirect tax levy.

Exports – Services

How are exports of services treated for VAT/GST purposes?

Exports of services are not taxed with BBO/BAZV and BAVP. Only services rendered in Aruba are subject to indirect tax levy.

Imports – Goods

How are goods dealt with on importation?

Imports of goods are in principle not taxed with BBO/BAZV or BAVP.

Imports – Services

How are brought in from abroad treated for VAT purposes?

Telecommunication services and such are subject to BBO/BAZV and BAVP in Aruba. In this case, the reverse-charge mechanism is applicable, which implies that the customer, established or residing in Aruba, should file the VAT return.

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

No, Aruba has a cascade tax system.

Are there any exemptions with the right to recover or deduct input VAT?

Not applicable.

Are there any restrictions to the deduction of input VAT?

Not applicable.

Tax Points

When is VAT/GST due on a supply of goods or services?

BBO/BAZV and BAVP are due when an entrepreneur realizes revenue through their business or profession by delivering goods or rendering services in Aruba.

Invoices

Is a business required to issue tax invoices?

For the turnover tax, no. For the health levy, yes.

Is it possible/mandatory to issue invoices electronically?

Electronic invoicing is possible but not mandatory.

Is it possible for the vendor to issue an invoice (i.e. self-billing)?

No.

Record-Keeping Requirements

How long must records and invoices be retained?

A company’s records should be retained for at least 10 years.

Can the invoices be stored abroad?

A company’s records should be available to the Tax Authorities at all times but there is no obligation to store invoices in Aruba as long as they can be provided to the tax authorities as needed.

Audits

Do tax audits take place on a regular basis?

Only incidentally (i.e. based on the filing of documents).

Are audits done electronically in your country (e-audit)? If so, what system is in use?

No.

What penalties can arise from non-compliance?

The following administrative fines can arise:

  • If the tax is not fully paid on time, a maximum of AWG10,000
  • If the tax is not fully paid on time or by gross negligence then the penalty is 100 percent of the owed tax amount.

Special Indirect tax rules

Are there any special rules for the sale of a company by one taxpayer to another where VAT is not due on the sale?

Generally no, but with the exception for if it can be seen as a goodwill. Goodwill may apply under certain conditions, depending on legislation.

Are there unique specific indirect tax rules that you would not expect to find in ‘standard’ VAT jurisdictions? 

The importing of goods is not a taxable event for the turnover tax or for the health levy and BAVP. No right exists to claim deduction of the turnover tax and/or health levy and BAVP paid by entrepreneurs.

Does a reverse-charge mechanism apply for goods or services? 

Yes, the reverse-charge mechanism is applicable on services from foreign service providers. Currently, the reverse-charge mechanism only applies to telecommunication services from foreign service providers. However, the Minister of Finance is authorized to appoint other service providers for which the reverse-charge mechanism may apply.

Are there indirect tax incentives available (e.g. reduced rates, tax holidays)?

If certain conditions are met, an exemption of turnover tax and health levy may be granted to companies incorporated and established in the Free Zone of Aruba and exclusively operating in the international warehousing, distribution and production of goods and/or the delivery of non-financial international services. Also, an exemption of the turnover tax (and health levy and BAVP) may be granted for companies established in the Special Zone of Aruba.

Rulings

Are rulings and decisions issued by the tax authorities publicly available?

No.

Footnotes

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

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