August 18, 2022
Today the government of Aruba has announced further plans with regard to the implementation of a VAT in Aruba. After last weeks announcements not to impose wage taxes on tips and not to abolish the investment allowance, further information was provided as to the implementation of a VAT system.
The government of Aruba will not implement a VAT system as per January 1, 2023, but rather will increase the current BBO/BAVP/BAZV with 1% or 1.5% to 7% or 7.5%. They will not allow for any further deduction of input tax paid by the entrepreneurs (as in a VAT system).
The government of Aruba will start discussions with the various stakeholders to investigate whether an implementation of VAT per January 1, 2024 can be realized.
To provide some compensation the government has announced further decreases in the Income Tax and Profit Tax rates and compensation for people receiving pension income.
It is unknown whether other measures proposed in the tax reform, such as the market value wages and possible changes in the IPC regime, will be withdrawn as well or if the tax reform in its minimal form will proceed per January 1, 2023.
Please note that none of these proposed changes have been finalized yet and are subject to changes. HBN Law & Tax will keep you informed about any future changes or further developments.