At the end of March 2020, the government introduced a series of tax relief measures to stimulate the economy in light of the COVID-19 virus outbreak. Below you can find some of the most important tax relief measures. Please note that most of these measures currently only apply on the taxes due over the months April, May & June 2020, unless stated otherwise.
Extension of payment terms
(BBO/BAZV/BAVP, Room tax, BBV, BBVAM, etc.)
Taxpayers with a revenue of Awg. 1 Million or less per month that have been affected by the COVID-19 virus outbreak and that have tourist related activities can request an extension to pay their BBO/BAZV/BAVP, room tax, BBV, BBVAM taxes over the months of April, May and June 2020. Please note:
- This extension does not apply to wage tax and social premiums (see below for specific measures related to these);
- The stated revenue of Awg. 1 Million per month refers to the actual revenue of the taxpayer over the months April, May and June 2020;
- This measure is applicable to companies that have tourist related activities which include hotels, bars/restaurants, casinos, car rentals, tour operators, beauty parlors, water sports companies, jewelers, etc. However, the list is indicative and it is hard to imagine a company in Aruba that does not have activities that are directly or indirectly related to tourism.
Companies have to do the following:
- Submit a request for extension;
- The request should include basic reports showing that the company has cash flow difficulties;
- The tax return forms of the months April, May and June 2020 still need to be submitted on time;
- As soon as the taxpayer has resumed its economic activities it will be required to pay the postponed taxes in a maximum term of six months.
Exemption of the employers part of AOV/AWW
Companies that have tourist related activities as mentioned above are exempt from paying the employers part of the AOV/AWW over their payroll over the months April, May and June 2020. In order to qualify for this exemption, the company has to submit a so-called payroll summary together with the wage tax and social premiums tax form. Note this is an exemption and thus will NOT have to be repaid once the company resumes normal economic activities.
Extension of the deadline to submit and pay profits tax 2019
The deadline to submit the (provisional) profits tax return 2019 has been extended with 6 months. With this measure, the normal deadline of May 31 has now been moved to Nov 30, 2020, making the deadline for submitting the provisional profits tax return equal to the final profits tax return. It is thus not necessary to use the provisional profits tax form in November. However, companies are allowed to submit the provisional profits tax return on time and pay the taxes due. This tax relief measure does not apply to financial institutions.
Postponement of payments for existing payment arrangements
Taxpayers who have an existing payment arrangement with the tax authorities can postpone payment on these for three months starting with April 2020.
No penalty fees for late payments
Late payment penalty fees for non-payments, partial non-payments or late payments of taxes (BBO/BAZV/BAVP, LB/AOV/AZV, etc.) over the months April, May and June 2020 will not have to be paid. This measure refers to the notorious “Verzuimboete Betaling” that is charged to taxpayers who did not pay their taxes or did not pay their taxes on time.
Suspension of interest calculation
The accumulation of interest on taxes due by taxpayers will be suspended over the months April, May and June 2020 provided that the taxpayer has come to an agreement on a new payment arrangement with the tax authorities.
More flexible payment schedules
Taxpayers who have been affected by the COVID-19 virus outbreak will now have access to more flexible payment schedules for the various types of taxes (income tax, social premiums, profits tax, real estate tax and land lease charges). This entails the following:
- Individual taxpayers can have up to a maximum of 24 months to pay a minimum of Awg. 100 per month
- Companies can have up to a maximum of 24 months to pay a minimum of Awg. 500 per month
- Retired individual taxpayers (60-plus) can have up to a maximum of 36 months to pay a minimum of Awg. 75 per month
When taxpayers want to settle their old outstanding tax liabilities immediately in one payment, the taxpayer can appeal to the following discounts:
- Outstanding taxes with a date up to December 31, 2010 – 75%
- Outstanding taxes with a date between January 1, 2011 and December 31, 2014 – 50%
- Outstanding taxes with a date between January 1, 2015 and December 31, 2019 – 10%
Reduced income tax rate on dividends extended
The current reduced income tax rate on dividends distributed during the year 2020 over profits up to December 31, 2019 has been extended to also include dividends distributed by a foreign company with a shares based capital. The distribution also must take place in 2020 to a resident shareholder.
As mentioned above, we have only summarized some of the most important tax relief measures here. Please follow this link for a complete list on the tax department’s tax relief measures page. We have also received the below document from the tax authorities which detail these measures.
Finally, take into account that these measures might change as the situation regarding the COVID-19 virus outbreak develops. We will keep our clients informed on future developments.