MARKETING EFFORTS BY FOREIGN COMPANIES IN ARUBA AND TAX CONSEQUENCES
Permanent establishment creates a taxable presence
Foreign companies wishing to promote their products in Aruba may ask the question whether marketing activities result in taxable activities in Aruba.
In Aruba the profit tax law applies the concept of a permanent establishment that creates a taxable presence without providing a definition. In practice it is understood that the concept includes representatives though also that certain activities will not lead to a taxable presence, as is the case in the definition used in the Tax Arrangement for the Dutch Kingdom which applies to Aruba, the Netherlands Antilles and the Netherlands.
The most relevant exemption is the one that states that renting space is not a permanent establishment if it is only used to advertise or to provide information and that the activities are as such auxiliary activities. Since representatives would be seen as a taxable presence if such employees of a foreign company were to conclude contracts in Aruba, doing so would create a taxable presence for the profit tax law. The Aruban profit tax rate is 28%.
Karel Frielink
Attorney (Lawyer) / Partner
