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Aruba: New Ordinance Modifies Tax Law

(Dec. 24, 2014) On November 21, 2014, an ordinance was published in Aruba’s Official Gazette amending the Income, Wage Tax and General Tax Act. (LANDSCOURANT VAN ARUBA [Official Gazette], No. 54 (Nov. 21, 2014), cited by Geert Weber, Aruba: Various Tax Changes Gazetted, TAX NEWS SERVICE (Dec. 17, 2014), International Bureau of Fiscal Documentation online subscription database.) The change affects several aspects of taxation.

Income and Wage Tax Changes

Although there will be no changes to the income tax rates and tax brackets, there will be a few new income tax provisions. An additional deduction of AWG3,500 (about US$1,960) will be available for those taxpayers who have reached the age of 60 by the first of the year, provided that their total gross income is no more than AWG35,000 annually. Although in force from November 21, 2014, this rule will have retroactive effect from January 1, 2013. (Weber, supra.)

Pensions and benefits awarded on job termination had been taxed at 15%. As of January 1, 2014, the rate for redeemed pension rights was raised to 25%; the rate for termination benefits will similarly go up to 25% on January 1, 2015. (Id.)

The current rule that an unlimited amount of mortgage interest paid for a primary residence can be deducted from income for tax purposes will change on January 1, 2015, when a cap of AWG50,000 (about US$27,900) per year will be imposed. (Id.)

In addition, taxpayers will now be able to reduce their gross wages subject to taxation by an allowance of AWG20,252 per year. (Id.)

Procedural Changes

New procedures have been put in place to simplify the exchange of information between Aruba and other nations. Limited partnerships will be required to maintain registers with the names and addresses of their partners; foundations, whether public or private, will need to keep a register of the names and addresses of the people who benefit from their work. (Id.)