Aruba – BBO on import; the definition of Trade Goods

September 14, 2023

Since the introduction of the BBO/BAVP/BAZV upon import of goods per August 1, 2023 a lot of uncertainty has arisen about the very general definition of “trade goods” in the legislation. The government had announced that they would further clarify this definition with a Ministerial Decree and have published this decree on September 13, 2023, just in time for the first BBO/BAVP/BAZV returns, including the deduction of input BBO/BAVP/BAZV, to be filed on September 15.

The Government of Aruba has introduced a levy of BBO/BAVP/BAZV upon import of goods per August 1, 2023, allowing for a credit of the BBO/BAVP/BAZV for entrepreneurs when they import trade goods in the tax return to be filed over the month in which the trade goods are imported.

Trade goods are defined as “goods imported with the intention for resale”. In the Explanatory Notes at the introduction of this legislation, the government has explained that “trade goods” are deemed to be goods sold on by the importer without any further processing.

In the Ministerial Decree of September 13, 2023, the Minister of Finance and Culture has specifically stated that the definition of “trade goods” as described in the National Ordinance BBO and BAVP and National Ordinance BAVP is deemed to include:

a. goods intended for sale in a business, where these goods have not been altered materially if these goods have been processed within the business of the entrepreneur importing the goods;

b. parts assembled or processed to create a new trade good in the business of the entrepreneur importing the goods, if these new trade goods are sold in a business;

c. any processing or alteration of goods with regard to food and beverages, if these goods are intended to be sold in a business, insofar the sale of the goods is the main purpose of the business activities, and the business is not mainly providing services.

According to some of the examples in the Explanatory Notes, the first inclusion under a. allows for minor changes to the goods imported, for instance repackaging of goods in smaller quantities, slicing up goods imported etc. The second inclusion under b. seems to be focused on the assembly and production of new goods in Aruba, for instance a bike shop importing goods separately to assemble a bike. The last inclusion under c. is focused on the food and beverage industry. By making a distinction between entrepreneurs in the food and beverage industry who provide services and those who mainly sell to produce, this sub-article seems to specifically exclude restaurants and bars that allow for sit-down dining and drinking and include the takeaway food stalls and fast-food restaurants. This is also explained in this manner in the Explanatory Notes.

The Ministerial Decree does clarify some queries but also allows for further interpretation due to the general wording in the Decree. HBN Law & Tax will be happy to assist you with any queries regarding the BBO/BAZV/BAVP upon import and your upcoming tax returns.

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