ARUBA: Tax Plan 2023 – the BBO impact on Electronic Services

ARUBA: Tax Plan 2023 – the BBO impact on Electronic Services

December 21, 2022

In the tax plan 2023, the government of Aruba has introduced additional legislation regarding the taxation of BBO/BAVP/BAZV on telecommunication services, radio and television services, and electronic services. The place of service of these services is deemed to be where the customer is residing, as an exemption on the main rule that services are deemed to be provided at the place of residence of the service provider. Furthermore, the government introduced a reverse charge mechanism for services provided by foreign suppliers to business customers in Aruba.

In this Tax Instant News, we will provide some high-level guidance on the definition and interpretation of this definition of electronic services based on the information currently available and the application of the reverse charge mechanism.

Place of Service

As a general rule in the National Ordinance BBO/BAVP and National Ordinance BAZV the place where services are provided is deemed to be the place of residence of the service provider. However, for some specific services, the place of provision of services is defined differently. Amongst these exemptions are services provided with regard to real estate property (place of service is the place where the real estate is situated), transport services (place where the transport is provided), and loading and unloading of goods (place where these goods are (un)loaded).

The tax plan 2023 includes to this list of exemption the provision of telecommunication services, radio and television services, and electronic services and states that these services are deemed to be provided at the place of residence of the customer.

Reverse Charge Mechanism

The government has recognized that with these exemptions (both existing and new) foreign service providers need to register in Aruba for BBO/BAVP/BAZV purposes. Since this may not be practical, especially when services are provided to customers who are registered themselves, the tax plan 2023 included the introduction of a reverse charge mechanism.

After the first draft, which had a lot of tax technical issues, was revised in a second note of change by the government, the reverse charge mechanism will only apply to the provision of services (not delivery of goods) and to the provision of these services to entrepreneurs residing in Aruba (not B2C, but only B2B transactions). Furthermore, the reverse charge mechanism will only apply to situations where the general rule of place of services does not apply.

Tax Agent (Fiscal Representative)

Foreign resident service providers that provide services to individual customers and to whom the reverse charge mechanism does not apply will still need to register for BBO/BAVP/BAZV purposes. These service providers may appoint a tax agent to register on their behalf. This tax agent will however take the full legal position of the foreign services provider, including liability for payment of taxes and preparing the return on time.

Definition of Electronic Services The definition of electronic services in the national ordinances is very general and leaves a lot of room for discussion. Electronic services are defined as services provided through electronic means.

The explanatory notes provide some guidance, but also some inconsistencies. The specific notes per article in the Explanatory Notes (“artikelsgewijs commentaar”) provide some examples of electronic services, including in this definition

• Building and maintenance of websites and software

• Downloading images, texts, and information

• Provision of access to databases

• Provision of access or downloading music, movies, or games

• Provision of access to online gatherings with regard to politics, art, sports, science, or entertainment.

The exchange of messages through electronic means is specifically excluded from electronic services, which includes according to the notes, the provision of advice by means of e-mail. Also, the delivery of goods ordered on internet platforms is excluded from the definition of electronic services.

The general notes however state that the reason for introduction of this legislation is the fact that electronic services, telecommunication services, and radio and television services are “consumed” at the place of residence of the customer, as are marketing and advertising services and services provided by consultants, such as engineers, lawyers, tax advisors, accountants, administrative services and consultancy services. However, these services are not included in the changes in the tax plan 2023, which questions whether the government means to include them in the definition of electronic services or whether they initially meant to include them in a separate note and then decided not to but forgot to change the general part of the explanatory notes.

No further guidance has been provided in any other reports of the government.


The government of Aruba has provided a list of examples of services included in the definition of electronic services but also excluded advisory services by means of e-mail and the provision of goods ordered on the internet.

We conclude that the government has intended to narrow the definition of electronic services to services that are solely provided through electronic means and, without further guidance, we conclude that any sale of goods or services by means of electronic platform should not be included in the provision of electronic services.

Please note that the reverse charge mechanism will apply to these services and therefore the customer is responsible and liable for payment of the BBO/BAVP/BAZV, which means that it is very important to have a specification of the specific services provided.

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