As
from 1st July, 2003, Aruba introduced
the New Fiscal Regime (NFR) which abolishes
its offshore regime as such. See Offshore
Legal and Tax Regimes and Domestic
Corporate Taxes for a full description
of the NFR.
Companies
formed prior to the introduction of the
NFR are 'grandfathered' into the NFR,
with existing privileges continued until
the end of 2007, meaning an effective
tax rate of 2.4% to 3% for foreign-owned
companies.
The
NFR contains a specific exemption for
the AEC (see below), although the exemption
is disapplied in the event that the AEC
generates profits from illegal activities,
as defined under Aruba criminal law. In
such case all of the AEC's profits earned
from the day of incorporation will be
liable to profit tax at the rate of 35%
(reduced to 28% as of 1st January, 2007).
However,
as from January 1, 2006, Aruba has introduced
a revised tax regime for these companies,
which offers three possibilities to AEC
companies:
- The
AEC can continue its activities as
a fully taxed corporation, subject
to tax at the normal rate.
- An
AEC can remain exempt if it acts as
a holding or financing company (but
not as a bank) with foreign subsidiaries
subject to a profit tax of at least
17.5% on at least 95% of dividends.
Investment activities can also remain
exempt, excluding real estate. Licensing
of intellectual property is also permitted.
- An
AEC can elect to be a pass-through
entity. The income of a “pass-through
AEC” would accrue directly to
the AEC’s shareholder(s) and
would be subject to tax at the shareholder
level. When electing for transparency
status an AEC has to disclose the
identity of its shareholder(s) to
the local tax authorities, and has
to file its financial statements with
the tax authorities in Aruba within
six months of the financial year-end.
Aruba Limited
Liability Company
The NV is a limited liability company
which is available to residents and non-residents
alike. An NV operated by non-residents
and trading outside Aruba is an offshore
NV, whereas an NV controlled by residents
and trading inside Aruba is an onshore
NV. Until the introduction of the NFR,
a more favorable fiscal regime applied
to an offshore NV than to an onshore NV
(see Offshore Legal
and Tax Regimes).
The
NV is subject to a much more complicated
regulatory regime than the AEC (see below)
which is the normal form of choice for
offshore operations. The following are
the main rules applying to an NV:
- The
minimum authorized share capital is
25,000
Aruba Florins
of which 20% must be issued, and a
minimum of two subscribers are required;
- An
NV must both file accounts and have
those accounts audited;
- The
NV's incorporation document must be
published in the official gazette,
and corporate details including the
director's name need to be entered
in the Commercial Register;
- In
order to trade, an NV must apply for
a business license to the Minister
of Economic Affairrs;
-
If the director of an NV is a foreigner
then an application for a director's
license must be made to the Minister
of Economic Affairs;
- Stamp
duty is payable on incorporation;
-
In order to open a bank account a
certificate from the chamber of commerce
must be lodged and the identity of
the beneficial owners disclosed;
- An
NV is subject to
foreign exchange controls;
- Shareholders'
meetings must be held in Aruba and
must be minuted.
Companies
involved in the provision of financial
service activities must by law use an
NV as a corporate vehicle.
Fees
payable on incorporation and annually
depend on capital; for the minimum level
of
Af 25,000 the intial fee will be Af 80
and the annual contribution fee also Af
80. Other
fees for clearance of the name from the
Ministry of Justice, for entry into the
Commercial Register, and for registration
of directors, will amount to a few hundred
florins. Professional fees will be extra.
BACK
TO TOP
Aruba Exempt Corporation
See above for changes
to Aruba company laws.
Legislation establishing
the Aruba Exempt Corporation (AEC) or
Aruba Vrijgestelde Vennootschap was passed
in 1988. It was
considered a more
attractive corporate vehicle than the
NV since it was
subject to fewer
formalities and regulatory restrictions.
It was
a limited liability
company whose shareholders' liability
for the company's debts was
limited to the amount
of unpaid share capital.
The
AEC
was known
as the "zero tax corporation" since no
tax was
payable so long
as all business income arises outside
of Aruba and so long as the company
was not
controlled directly or indirectly by Aruban
residents (see Offshore
Legal and Tax Regimes). The following
were the
key characteristics of the AEC:
- The
minimum authorized share capital is
10,000 Aruba florins of which a minimum
of one share of one Aruba Florin must
be issued;
- Capital
can be expressed in any currency;
- A
single subscriber is permitted for
incorporation and there is no need
to publish incorporation details in
the Official Gazette;
-
No stamp duty is payable on incorporation;
- Shares
can be voting or non-voting, limited
voting, preference or cumulative preference.
Bearer and no par value shares are
permited.
-
If the director of an AEC is a natural
person then that person must be a
non- resident, but if the director
is a company then resident corporate
directors are allowed;
- Directors'
and business licences are not needed;
-
An AEC must have a registered office
and a locally licensed legal representative;
-
There is no requirement to prepare
or file financial accounts unless
the company has an authorized capital
of more than 50,000 Aruba Florins
in bearer shares
-
An AEC cannot conduct business activities
in Aruba other than activities in
connection with the maintenance of
its office there;
- AECs
are not subject to foreign exchange
restrictions;
-
Shareholders' meetings can be held
anywhere in the world and need not
be minuted.
The annual registration fee payable to
Government is US$285, and a further $40
is payable to the Commercial Register.
Fees will also need to be paid to the
resident agent.
The incorporation time schedule is reasonable.
Registration of a company takes only a
few days which by the standards of civil
law jurisdictions is very quick.
BACK
TO TOP
Aruba General Partnership
Partnerships are recognised under the
Aruban Commercial Code. In the General
Partnership (vennootschap onder firma)
each partner is liable for all the debts
of the partnership, as in common law partnerships.
There are no filing requirements, and
no auditing requirements. Partnerships
are fiscally transparent.
Details
of partnerships and of the partners must
be entered in the Commercial Register
at the Chamber of Commerce.
BACK
TO TOP
Aruba
Limited Partnership
The limited partnership (commanditaire
vennootschap) is similar to the general
partnership except that it has one or
more general partners with unlimited liability,
who manage the partnership, and one or
more limited partners each of whose liability
is limited to the amount of his contribution.
The identity of the limited partners does
not have to be disclosed or entered in
the Commercial Register.
BACK
TO TOP
