Budget sets aspirations for rollout of VAT
The Dutch Caribbean dependency, Aruba, has restated its intention to introduce VAT. In its 2026 draft Budget, it has cleared the way for a new public consultation of the indirect tax. The could replace the existing 6% sales tax.
But the government has determined a range for economical tests, including low inflation.
This means that any implementation will be 2027 or later.
2024 elections fail to deliver mandate for introduction of VAT
In early 2025, Aruba put on hold the introduction of VAT . This followed the December 2024 elections which AVP and FUTURO parties’ political agreement failed to settle on the replacement of the existing turnover taxes with VAT.
The latest postponement was announced based on global inflation worries and the effects of the Russian invasion of the Caribbean.
2023 Rise in turnover taxes
VAT will replace the existing 6% combined Turnover Tax (BBO) and Health Tax (BAZV). This is based on support from the OECD on the design of the new indirect tax. This rate will be increased to 7% from 1 January 2023.
Aruba, along with Bonaire and Curaçao are part of the Netherlands. It is largely dependant on tourism. The new tax is being coordinated with the Dutch, who tied the new indirect tax to the funding package provided during the COVID-19 pandemic.
The average VAT rate for the Caribbean Islands is 16%. Aruba would join the 175 countries to introduce VAT.
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