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Aruba: Domestic Corporate Taxation

Calculation of Taxable Base

Income is widely defined and includes capital gains on the purchase or sale of 'business assets' and shareholdings. Gains realised in a liquidation of a company or on the purchase by a company of its own shares are also taxable.

As a rule, tax and financial accounts in Aruba are required to be identical.

Operating losses can be carried forward for five years; there is no provision for carry-back of losses, for consortium or group relief.

Valuations for tangible fixed assets can include incidental costs of purchase; depreciation is normally by straight-line over the useful life of the asset, but reducing balance is also permitted.

Provisions are generally not deductible.

Inventory valuation should be commercially justifiable; subject to this requirement, both LIFO or FIFO are acceptable.

One third first-year capital allowances are available. Intellectual property assets can be depreciated over their useful lives; goodwill generated on purchase is depreciated over three to five years.

In principle, interest paid and accrued on borrowings, as well as payments for the use of material and immaterial goods and the provision of services, is not tax deductible insofar as the transaction is deemed to be not at arm's length.

The New Fiscal Regime introduced a further limitation on the deductibility of interest paid or accrued on borrowings and on payments for the use of material or immaterial rights or for services rendered to an entity resident outside of Aruba, unless:

  • the interest or payments are neither directly nor indirectly owed to an entity related to the paying company;
  • the interest or payment received is actually taxed at an effective rate of at least 5%; or
  • the entire interest in the entity to which the payment is owed is directly or indirectly held by a qualifying company whose shares are listed on a stock exchange approved by the Aruba minister of finance and economic affairs.

Dividends received from other corporations are now taxed under NFR (previously they were not taxed unless the dividend was received from an offshore Aruban corporation). But see above for the rules governing IPCs (Imputation Payment Companies) which benefit from reduced rate of tax on dividend income.

There are no 'cfc' rules: the undistributed income of foreign subsidiaries is not taxed.



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