Economy of Aruba

Exports and Imports

Aruba primarily exports goods like rolled tobacco, refined petroleum, scrap iron, and alcoholic beverages. The US, Colombia, and the Netherlands are their major trading partners. Imports, on the other hand, significantly outweigh exports, with Aruba relying heavily on foreign goods like food (around 20% of imports), machinery, and manufactured products. Data for 2 specific years isn't readily available, but trade deficit estimates suggest imports surpass exports by millions

Infrastructure Development

Aruba boasts a well-developed road network with a total length exceeding 800 kilometers as of 2023. Investments are also being made in other infrastructure projects like port modernization (e.g., expansion of Oranjestad harbor), water management systems (including desalination plants), and renewable energy sources (like wind farms).

Fiscal Policy

The Aruban government aims to maintain a balanced budget through a combination of taxation and spending. Tourism revenues are a major source of income, with taxes also levied on corporate profits (around 25%), imports (varying rates), and property (ownership and transfer taxes).

Trade Agreements

Aruba benefits from trade agreements with the Netherlands and other European Union countries. These agreements grant preferential tariffs and access to a wider market, particularly for agricultural products.

Environmental Regulations

Aruba prioritizes environmental protection with regulations aimed at sustainable tourism practices, waste management (including a national waste plan), and conservation of natural resources. Measures are in place to control pollution (focusing on air and water quality), protect marine life (including coral reefs), and promote responsible development through stricter building codes and environmental impact assessments.

Tax system

Corporate Tax Rate: As of December 2022, the corporate tax rate sits at a competitive 22%. This applies to profits generated by businesses operating within Aruba.
Sales Tax: Instead of a sales tax, Aruba utilizes a turnover tax called Belasting op Bedrijfsomzetten (BBO). This low 1.5% tax is levied on the turnover generated by businesses from the sale of goods and services within Aruba.
Property Tax: Aruba has a transfer tax named Overdrachtsbelasting applicable to real estate transactions. This is a 3% levy on the transfer value exceeding a specific threshold. There's no annual property tax for owning real estate.
Payroll Tax: The Loonbelasting payroll tax is split between employer and employee contributions, funding social security programs. Contribution rates depend on the employee's wage level.
Tax Deductions and Credits: Aruba offers various tax breaks to incentivize specific activities. These include deductions for business expenses, depreciation of assets, and investments in designated sectors. Research and development, along with qualifying foreign investments, can also benefit from tax credits.
Tax Compliance: Aruba boasts an efficient tax administration system with electronic filing and clear regulations. However, some challenges persist, such as potential loopholes for offshore companies.
Tax Burden: Compared to many other countries, Aruba's overall tax burden is considered relatively low. This makes it an attractive location for businesses and high-net-worth individuals. The recent decrease in the corporate tax rate might necessitate exploring alternative revenue sources in the future.