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Aruba Issues Update on Second Tax Relief Plan — Orbitax Tax News & Alerts

Aruba's government issued a release on 29 January providing an update on the second tax (fiscal) relief plan in response to the COVID-19 pandemic, which was first announced in November 2020.


Tax relief plan part 2

ORANJESTAD – Last year, the government announced the Tax Relief Plan 1 to bring fiscal relief to the companies affected by the COVID-19 crisis.

In November 2021, the government announced the Fiscal Relief 2 package consisted of 11 incentives to reactivate and stimulate our economy. In December 2020 two additional incentives were announced to complete the 13 incentives of the Fiscal Relief 2.

The 13 tax incentives are:

  1. Small companies with a maximum turnover of AWG. 84.000,- per year will be exempted from the obligation to pay BBO, BAZV, and BAVP as of 2021 (KOR - Dutch Kleine ondernemingsregeling - Small business regulation). This applies to entrepreneurs such as snack trucks, cab drivers, buses, craftsmen, musicians, hairdressers, etc.
  2. Promising sector startups in Tourism, Knowledge-Economy, Logistics, Agricultural Economy, Circular Economy, and the Creative Industry can in the years 2020, 2021, and 2022, deduct 50% of the principal amount of their loan from their income and profit tax up to a maximum of AWG. 30.000,- per calendar year. Companies in the sectors mentioned above that have a loan from AWG, for
  3. Extension of the loss compensation with 2 additional years, for a total of 7 years. Enterprises have currently a loss compensation period of 5 years. With part 2 of the tax contingency plan, entrepreneurs can extend the loss compensation by another 2 years for a total of 7 years.
  4. A deduction of 300% for training and untaxed training cost reimbursement in 2020, 2021, and 2022.
  5. Additional deduction of 100% for marketing and promotional costs in 2020, 2021, and 2022 up to a maximum of AWG. 30.000,-.
  6. Relaxation of the tax rate reduction policy for dividends paid up to 10% for an Aruba-based shareholder.
  7. Broadening of the beneficial policy concerning the savings and provident fund scheme for the years 2020 and 2021. Concerning the amount saved in a savings and provident fund, a favorable policy is approved to allow employees to withdraw the amount saved untaxed during the years 2020 and 2021, even though these amounts have not been in the savings account for four years. This applies in the case of funerals, home purchases, children's studies, and other emergencies.
  8. 'Investment deduction' will be increased to 10% and money also for business assets purchased abroad.
  9. Elimination of the special tax on rental cars and rental motorcycles (BBVAM) effective the fourth quarter of the financial year 2020.
  10. Flex payment arrangements for businesses for 3, 6, or 12 months with a minimum repayment amount of Afl. 500.
  11. Restructuring policy in the event of a lump-sum payment of outstanding (tax) debts with a 30% discount valid until 30 June 2021. According to the remediation policy, taxpayers are entitled to a 30% discount on the payment of a lump sum of outstanding old (tax) debts. The remediation policy is valid until June 30, 2021.
  12. Since January 1, 2021, reduction in import duties for the import of building material from 12% to 10%.
  13. Reduction of 2% on salary and income tax rate.