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With an open and rapidly developing economy, Aruba has gone from strength to strength over the last two decades. However, navigating the complex legal, tax and regulatory environment can be challenging without local help.
Aruba is a small island economy with big economic potential. Located in the Caribbean Sea above Venezuela and Colombia and within a short distance of central and North America, it has excellent connectivity to high-growth spots and developed economies. With one of the highest GDP per capita in the region, investors from around the world are welcomed by a safe business environment with an educated, skilled and multilingual workforce ready to boost company operations.
Tourism sits at the heart of the economy, but a rapid rise in tertiary sector services has led to a boost in infrastructure spending and real estate development. The competitive tax structure is complemented by political and economic stability. With a 10-year Fitch rating of BBB and a stable currency, pegged to the US dollar, businesses can be assured of a secure and flexible investment environment in which to grow. However, having local help on board is crucial to effectively navigating the complex administrative hassles of setting up overseas.
Company structures
There are four primary company structures used in Aruba, all of which have slightly different processes for incorporating and operating. Limited liability company, Aruban exempt company, foundation company and partnerships are the most commonly used legal entities, which are each required to follow different processes in terms of shareholder meetings, financial recording and taxation.
Intellectual property
Intellectual property is governed under several legal headings. Trademarks, copyright, data protection, patents and confidential information are all governed tightly to ensure that intellectual property entering Aruba is kept secure.
Banking
The tertiary sector has expanded at a rapid rate in Aruba, which has led to new regulations and governing bodies being introduced to overlook compliance and procedure. The Central Bank Ordinance is entrusted with the prudential supervision of the credit institutions, insurance companies and company pension funds based on legislation, and licences must be sought from the CBA before financial institutions can begin operating.
Bankruptcy
Bankruptcy is a complex affair in Aruba, and the regulatory proceedings can take many months to complete. The laws governing international bankruptcies also differ from those for domestic companies, which should be taken into account.
Tax
For resident companies corporate income tax is, in principle, levied on the aggregate net profit from all sources during the company’s accounting period. Non-resident companies are subject to tax on specific Aruban income items. There are many different definitions of what constitutes an Aruban entity and a foreign entity which can cause confusion, and determination of taxable income is also a sticky issue.
Culture
The people and culture of Aruba have many different backgrounds, with some estimates suggesting there are more than 40 different nationalities living on the tiny island. Crime is very low in Aruba and there is a great deal of mutual respect. Doing business is a very ‘westernised’ affair, with formal wear and approach advised.
TMF Group
We have the local knowledge to help you navigate these minefields. Whether you want to set up in Aruba or just want to streamline your Aruban operations, talk to us.