Aruba: Country and Foreign Investment
Free Trade Zones
The Free Zone was created to boost exports and increase foreign exchange earnings. Originally, only companies involved in "commercial" or "industrial" activities (which includes the servicing, repairing and maintenance of goods with a foreign destination) could be licensed to operate within the Free Zone.
Under a new law, the State Ordinance Free Zones 2000, service-oriented companies (excluding financial services) are also able to operate from the free zone. Mechanical engineers, software developers, business consultants and many other service businesses can benefit from the incentives offered by the Aruban free zone. Drop shipments (also a type of service activity), whereby the goods do not physically have to pass through the free zone of Aruba, are also considered an export activity and the attractive 2% profit tax is applicable.
Free Zone companies receive substantial fiscal incentives (see Offshore Legal and Tax Regimes) including exemption from import duties and low rates of taxation. They also benefit from a simplified administrative regime.
In 1995 exports from the Free Zone amounted to 754 million Aruba Florins (an increase of 50% in 3 years) which is a significant level of economic activity given that the population of the Island was only 87,000 people at that time.
In late 2003 it became clear that the Free Zone would be expanded, with the addition of Barcadera to the original site at Oranjestad. The location of Barcadera near the airport and the existing harbor of Barcadera has made it the ideal place in Aruba for manufacturing, off shore and distribution business services.
It has also been announced that Barcadera will be developed as Aruba's main port. A third site at Bushiri has also been added to the Free Zone complex. The Bushiri site covers an area of 9.2 hectares and is just one mile from Oranjestad. The Aruba Free Zone has carried out an intensive marketing campaign geared at attracting more South American firms to invest in the new free zone of Aruba.