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Aruba: Country and Foreign Investment

Executive Summary

This page was last updated on 19 Feb 2019.

Aruba is a Caribbean island lying to the north of Venezuela and west of the islands of Curaçao and Bonaire. Though small (179 km2, 69 sq. mi), Aruba has a population of 105,900 (2019 est.). Following a referendum, Aruba separated from the Netherlands Antilles in 1987 and became a constituent country of the Kingdom of the Netherlands. The legal, political and administrative systems are largely modelled on the Dutch originals, though there has been some common law influence on the offshore regime.

Government, judiciary and the central bank are established in Oranjestad, the capital. The official languages are Dutch and Papiamento, a Portuguese-based creole language. The local currency is the Aruban florin, which is fixed at 1$US = 1.79 Afl. There is a well connected airport at Oranjestad.

Aruba is an associate territory of the EU. The Aruban economy is very open and is highly dependent on tourism and offshore financial services. Most goods are imported as there are few natural resources. An important refinery was shut for a while but is now open again, mostly for trans-shipment. GDP per capita (PPP) was estimated at Afl37,500 in 2017. This is one of the highest  levels in the region; economic fundamentals are good and unemployment is low enough to create labour shortages.

Local taxes are quite high for residents, but there is a well-developed offshore sector which originated in World War Two as a haven for Dutch companies fleeing the German occupation of the Netherlands. There are many financial links with the Netherlands and South America. The well developed financial and professional infrastructure is based on Dutch law, a civil law system based on the Napoleonic Code. Banking, licensing, insurance and holding companies are the main offshore sectors. The level of taxation on most offshore activities is light. There is a free zone which has successfully attracted manufacturing companies with markets in the EU and the Americas.

Aruba’s only full tax treaty is with the other members of the Kingdom of the Netherlands; this however gives access to the many Dutch tax treaties and a good withholding tax regime. There is no banking secrecy legislation as such, but beneficial ownership of offshore companies does not have to be disclosed. The jurisdiction is party to 23 tax information exchange agreements (at time of writing).

Air communications are excellent with over 200 flights a week and daily flights to major cities in Europe, North and Latin America. Telecommunications and computer networking facilities are the most advanced and well developed in the region.

 

 

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