International Law

MARKETING EFFORTS BY FOREIGN COMPANIES IN ARUBA AND TAX CONSEQUENCES

By Karel.Frielink

Permanent establishment creates a taxable presence

Foreign companies may wish to promote their products in Aruba. Do marketing activities result in taxable activities in Aruba?

In Aruba the profit tax law applies the concept of the permanent establishment that creates a taxable presence without providing a definition. In practice one believes that the concept includes the representative and 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 being the one that says that the renting of a 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 are seen as a taxable presence if such employees of the foreign company would conclude contracts in Aruba, that would create a taxable presence for the profit tax law. The Aruba profit tax rate is 28%.

Karel Frielink
Attorney (Lawyer) / Partner

Full post as published by Karel's Legal Blog on February 11, 2008 (boomark / email).