The Aruba Government has released a new fiscal reform plan, which will cut personal taxes and overhaul the property tax regime.
The plan will be introduced in four phases. The first phase will reform personal taxes and hike „sin“ taxes from January 1, 2019.
Aruba currently has 14 personal loan tax and income tax brackets, which the Government proposes to reduce to five. Under the changes, the first AWG27,751 (USD15,500) of income will be tax exempt – a decision that is expected to result in 30,000 taxpayers no longer being subject to the levy. The top tax rate of 58.95 percent will be reduced to 52 percent.
The first phase will also reform the property tax regime, to make the system progressive, based on property values, and to levy higher rates on overseas owners and companies that own commercial property. The Government has said that there will be a reduction in dividend tax from 25 percent to 10 percent but it is unclear whether this will take place from January 1, 2019, or as part of later reforms.
The second phase will focus on indirect taxes, such as the turnover tax (BBO), import taxes, and additional sin taxes. Import taxes and excise duties for tobacco products and alcoholic drinks will be increased.
Phase three will reform profit taxes, dividend taxes, and income taxes, and the final phase will include the introduction of a room tax and a car rental tax.