Corona: Tax Relief (Alivio Fiscal 2020)

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Introduction

In view of the coronavirus crisis, the Aruba government will introduce a relief package for the following two groups (news briefing):

i) The unemployed as a direct consequence of the crisis (investment: Awg 214 Million).

ii) Small and Medium Sized Enterprises (SMEs) with less than 50 employees (investment: Awg 40 Million).

The 2020 budget was approved by Parliament on March 24th, 2020. The approval by the Council of Ministers of the Kingdom is now pending in order to start looking for funds on the international market.

It is estimated that Aruba will have to attract external funds to the amount of Awg 1.3 Billion to cover the deficit due to the crisis. Included therein are lost tax revenues due to the postponement of the Tax Reform and the expectation that taxpayers will default on their tax payments.

Relief Package

The information below is based on the sheets 'Alivio Fiscal 2020' and additional information provided by AHATA, as well as the Tax Department.

• The relief package will apply to SMEs with the goal to help with cash flow and retain as many employees as possible.
• The relief package will apply from April through June 2020.

Filing and payment extensions, flexible payment plans, repayment of open balances at a discount, deferral of penalties and interest

a). Taxpayers will be granted an extension to file tax returns and pay taxes beyond the 3 month period, without facing penalties on late filings of monthly tax returns (in full or in part). Penalties on late payment over the months of April, May and June 2020 will be deferred.

b). Interest on open balances will be deferred for 3 months starting April 2020, provided the taxpayer concludes a new payment plan.

c). The deadline for filing and payment of the 2019 Profit Tax will be postponed by 6 months. The new deadline for SMEs whose fiscal year coincides with a calendar year is November 30th, 2020. This facility is not applicable to financial institutions.

d). An extension of three (3) months will be granted for existing payment plans, starting April 2020.

e). Flexible payment plans will be introduced for all taxes as follows:

• a maximum of 24 months for SMEs with a minimum of Awg 500
• a maximum of 24 months for individuals with a minimum of Awg 100
• a maximum of 36 months for pensioners (60+) with a minimum of Awg 75

f). The opportunity to pay open balances at once at a discount will be introduced, as follows:

Date of assessment:

• Until December 31st 2010 - 75% discount
• From January 1st 2011 until December 31st 2014 - 50% discount
• From January 1st 2015 until December 31st 2016 - 30% discount
• From January 1st 2017 until December 31st 2019 - 10% discount

Payment extensions for Turnover Tax, Tourist Tax, Gambling Tax, Special Accommodation Tax, Special Tax on Rental Cars and Motorbikes

SMEs affected by the crisis with a yearly turnover of less than Awg 1 Million, that perform the following activities: Casino, Transport and Tour Operator, Security, Cafe, Bar, Restaurant, Landscaping, Spa, Car Rental, Travel Agency, Water Sport, Car Wash, Laundry, Perfumery, Jeweler, Clothing Store, Shoe Store, Souvenir Shop, Ground Handler, Employment Agency, Construction Company:

are entitled to a payment extension for the Turnover Tax (BBO, BAVP, BAZV), Tourist Tax, Gambling Tax, Special Accommodation Tax (BBV), and Special Tax on Rental Cars and Motorbikes (BBVAM) over the months of April, May and June 2020.

1.    A request should be filed with the Tax Inspectorate including simple financial reporting evidencing cash flow shortages.

2.    The monthly tax returns over April, May and June 2020 should be filed timely.

3.   The deferred taxes should be paid in a maximum of 6 installments after business activities have resumed.

Relief on employer contributions to social security premiums AOV/AWW

SMEs with the following activities: Casino, Transport and Tour Operator, Security, Cafe, Bar, Restaurant, Landscaping, Spa, Car Rental, Travel Agency, Water Sport, Car Wash, Laundry, Perfumery, Jeweler, Clothing Store, Shoe Store, Souvenir Shop, Ground Handler, Employment Agency, Construction Company:

will be relieved of the employer contributions to the social security premiums AOV/AWW over the months of April, May and June 2020, under the condition that they provide the tax inspectorate with a payroll summary and file the payroll tax returns.

No garnishment of assets, no tax audits and no penalties on voluntary disclosures

Garnishment of assets (beslagen) will be postponed for 3 months starting April 2020. Warrants will continue to be served.

Tax audits will not take place until the end of June 2020, with the exception of cases involving fraud.

Furthermore, no penalties will be imposed on voluntary disclosures (inkeerbepaling). A voluntary disclosure means that the taxpayer files a correct and complete tax return, or discloses correct and complete information after-the-fact, prior to the tax authorities having become aware of the discrepancy.

Beneficial policy on taxation of dividend income extended to include companies not vested in Aruba

The Minister of Finance, Economic Affairs and Culture has issued a beneficial policy for the reduction of dividend income taxation for individuals in 2019. The individual income tax rate on dividend income is reduced to 10%, subject to the following conditions, i) the dividend is paid by a company established in Aruba whose capital is divided into shares; ii) the dividend is paid out of retained earnings accumulated prior to 2019; and iii) the dividend is paid in the 2019 calendar year.

For the purposes of this Tax Relief, the beneficial policy is extended to include dividend paid by a company not vested in Aruba, whose capital is divided into shares, which dividend is paid out of retained earnings accumulated until December 31st, 2019 the latest, and which dividend is paid out to a shareholder, with residence in Aruba, during the calendar year 2020.