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HomeBusinessEconomyAruba announces income and payroll tax tariff reduction

Aruba announces income and payroll tax tariff reduction

ARUBA, Oranjestad – Starting on January 1, 2021, the tax department will introduce a reduced income and payroll tax tariff. The tariffs for both the income and payroll tax are identical.

This tariff is very important for both the individual as the business owner. This tariff reduction means that individuals and business owners will pay less in income and payroll taxes in 2021. Employees will certainly notice a smaller payroll tax amount retained by their employer, meaning the employees will receive more on their paycheck.

Considerations 

The tariff reduction is an essential part of the Fiscal Reform that the minister of finance, economy and culture and the commission in charge of the implementation of the tariff simplification system, have been introducing since 2019, including the increase of the tax-free limit to Afl. 27.751,00

In 2020 they continued with the planned changes and have again increased the tax-free limit to Afl. 28.861.

In 2020, the COVID-19 pandemic caused a serious social-economic emergency that took the government time to get out of. Many households suffered considerable income losses. Meanwhile, the government initiated the economic recovery process and it was considered appropriate to reduce the income and payroll tax tariffs to provide some financial relief for its contributors. These tariff reductions will also provide relief in the purchasing power of each person and create stability in the economy.

Ministerial Decree

In order to execute article 25 paragraph 3 and 4 of the income tax law, the tariff changes have been formalized in the Ministerial Decree issued on December 28 2020 (AB 2020 no. 207).

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