Subject to turnover tax (“belasting op bedrijfsomzetten”), hereinafter: BBO, and health tax (“bestemmingsheffing AZV”), hereinafter: BAZV, are entrepreneurs that in the course of their enterprise supply goods or render services in Aruba. The taxable base consists of all remunerations (in cash or in kind) received by the entrepreneur for the supply of goods or the rendering of services in Aruba. The rate is set on 1.5% for BBO and 2% for BAZV. Although it are different taxes, their tax bases and other characteristics are similar.
- Export. Export of goods to buyers residing or situated outside of Aruba will be exempted from BBO/BAZV as long as the entrepreneur can make credible that the sold goods are shipped or transported by him to a destination outside of Aruba.
- Entrepreneur. An entrepreneur is defined as any person or entity that conducts an enterprise. Therefore even a company established abroad is an entrepreneur for BBO/BAZV purposes on Aruba.
- Goods and services. Goods are defined as all physical objects as stipulated in the Aruba civil code, but also include water, gas and electricity. Services are defined as all activities, except the supply of a good, rendered against a payment.
- Payment. All income received that relates to the supply of a good or the rendering of a service is considered a payment. Therefore the BBO/BAZV charged on for example the supply of a good is also subject to BBO/BAZV. If the payment received is not arm’s length or non-monetary, the taxable base is the fair market value of the good supplied or the service rendered. An exception is made for own products, for which the payment is determined on the cost of the good. However, since the cash system is the general system for BBO/BAZV purposes, offsetting amounts is also deemed a payment. Furthermore, the amount in Accounts Receivable that is there for more than two (2) years is also considered a payment.
- Supply of goods. Goods are in principle supplied at the moment of transfer of ownership via an agreement. There are some exceptions however, in which cases from a legal point of view no supply has taken place yet but for BBO/BAZV purposes it has. In case in connection with the supply the goods are shipped or transported, unless an installation supply is deemed present, the taxable event is there where the transportation of the good started. In all other cases the taxable event is there where the goods physically are. An example to illustrate. If X Inc., situated in the US, sells a water scooter to an Aruba hotel, X Inc. is not subject to BBO/BAZV since the transportation of the water scooter (in connection with the supply) starts in the US.
- Rendering of services. If services are rendered, the taxable event is there where the entrepreneur is established or has a permanent establishment from which the services are rendered. Exceptions are made for services related to:
- Real estate, which services are taxable there where the real estate is located;
- Movable property, which services are taxable where they are actually performed;
- Transportation of goods and persons (including loading and offloading), movable property, culture, sports, science, education, entertainment or similar events, which are taxable there where the services are physically rendered.
- Fiscal unity. If the parent company owns 100% of the shares in the subsidiary, which subsidiary should be incorporated under the law of Aruba and with its factual place of management in Aruba, upon request the turnover generated with transactions between the entities participating in the fiscal unity is exempt from BBO/BAZV.
- Cash or invoice (accrual) based. The BBO/BAZV is levied on a cash basis. Upon request however, an entrepreneur may opt for an invoice (accrual) based BBO/BAZV. The tax authorities will have to approve the request before the invoice based system may be applied.
- Requirements invoices and cash register receipts. All invoices must (i) be numbered consecutively, (ii) be dated, (iii) mention the date on which the goods are delivered or the service is performed, (iv) mention the entrepreneurs’ name, address and personal identification number for tax purposes (“tax PIN”), (v) mention the name and address of the buyer of the goods or recipient of the services, (vi) mention a description of the goods sold and delivered and/or the services rendered, including quantities involved and (vii) mention the consideration owed. The same requirements are also applicable to cash register receipts, with the exception of the listing of the name and address of the buyer.
Only for BAZV purposes, the invoice or cash register should contain the amount of BAZV to be remitted on the turnover generated.