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Aruba: Special Tax to Bolster General Sickness Fund

(Feb. 24, 2015) On December 1, 2014, Aruba began to levy a special, monthly 1% tax on most business transactions. The monies collected are to be contributed to Aruba’s General Sickness Fund (Bestemmingsheffing Algemeen Fonds Ziektekosten). (René Offermanns, Aruba: Special Levy to Contribute to General Sickness Fund Introduced, TAX NEWS SERVICE (Jan. 28, 2015), International Bureau of Fiscal Documentation online subscription database.) The levy, which is called the bestemmingsheffing AZV (algemene ziektekostenverzekering), general health insurance destination charge, is a tax to be paid by most businesses or professions providing goods and services in Aruba. (Id.; National Ordinance of November 27, 2014, Imposing a Tax on Behalf of the General Sickness Fund and Ancillary Rules (National Ordinance on Destination Charge AZV) (issued Nov. 28, 2014, in force on Dec. 1, 2014), 59 AFKONDIGINGSBLAD VAN ARUBA [OFFICIAL GAZETTE OF ARUBA] (2014), Overheid.aw legal database.)

The destination charge is generally payable at the time payment for the supply of the goods or services is fully or partially received. (National Ordinance on Destination Charge AZV, art. 10(1).) Typically, the levy may be paid on a monthly basis. (Offermanns, supra.)

The supply of goods and the provision of services under the Ordinance is defined broadly to include, for example, to the transfer of ownership of goods pursuant to a contract; the delivery of goods under a contract of hire purchase (installments) or financial leasing; the transfer of ownership of goods pursuant to a claim by or on behalf of the government; and the grant, transfer, modification, waiver, or termination of rights over immovable property, with the exception of the right of mortgage. (National Ordinance on Destination Charge AZV, § 3 art. 6(1).

The following are exempt from the tax:

– supply of real estate on which property transfer tax is due;
– supply of fuel to aeroplanes [sic] and ships used for the international transport of goods and services;
– supply of fuel to companies generating heat and electricity;
– services supplied by public and general schools, or for the benefit of the University of Aruba;
– rent of real estate to an individual if it is used as a main residence; and
– services supplied at the sea territory of Aruba or at the airport, with respect to incoming and outgoing goods and services. (Offermanns, supra.)

Also exempt are the following goods: medicines only available by prescription and various medical products; hotel room and apartment rent, if the turnover is subject to a tourist tax; games of chance, on which a gambling tax may be imposed; and international transport of goods and services. (Id.)

Certain kinds of entities are also exempt from paying the levy. These include those that generate and supply electricity, companies established in a tax-free zone, insurance companies, pension funds run by a private business or the government, and certain credit institutions. (Id.)