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Aruba has amended its Free Zone regime with effect from 1 January 2020. The Free Zone regime provides certain benefits including a 2% corporate tax rate on qualifying income. Changes to the regime including income from services provided from a Free Zone to the local Aruba market are eligible for the 2% corporate tax rate, although the service types that may be provided from a Free Zone have been limited. This includes that the following services are excluded:

  • Financial services;
  • Services provided by accountants, tax advisors, notaries, and lawyers;
  • Services including the disposal or licensing of intellectual and industrial property rights; and
  • Other services that are to be specified by decree.

Further, the economic substance requirements for core revenue-generating activities are introduced for Free Zones, including that failing to comply with the requirements will result in the termination of Free Zone status. Grandfathering is also provided to 30 June 2021 for intellectual property service activities that already existed as at 1 September 2018 or where a service provider not engaged in intellectual property activities existed prior to 15 November 2018.