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Aruba: Offshore Legal and Tax Regimes

Introduction

This page was last updated on 22 Feb 2019.

In July 2003, Aruba introduced the New Fiscal Regime (NFR) which abolished its offshore regime as such. See Offshore Legal and Tax Regimes and Domestic Corporate Taxation for a full description of the NFR.

The NFR contains a specific exemption for the Aruba exempt corporation (AEC), though the exemption is rescinded if the AEC generates profits from illegal activities as defined under Aruba criminal law.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 28%.

However, as from 1 January 2006, Aruba has introduced a revised tax regime for these companies, which offers three possibilities to AECs:

  • 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.

Prior to the NFR, in order to qualify for offshore status, an Aruban entity had to be wholly owned by non-residents, and its income had to arise outside the jurisdiction; non-financial offshore operations usually take the Aruban Exempt Corporation form. However, various business sectors have specially favourable taxation regimes which reflect their international nature. These special regimes are described in this section.

 

 

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