ORANJESTAD, Aruba — In a landmark move to reshape the island’s economic landscape, the Government of Aruba officially activated a suite of aggressive tax incentives today, January 3, 2026. Aimed at urban revitalization and high-tech entrepreneurship, the new fiscal framework is already sparking a “gold rush” among offshore professionals and regional developers eager to secure positions before critical application windows close.
The initiatives, first detailed in Ministerial Decrees published in late 2025, represent the core of the AVP–FUTURO government’s 2025–2028 economic program. By slashing corporate tax burdens and offering unprecedented exemptions, Aruba is positioning itself as the Caribbean’s premier destination for sustainable investment.
Urban Revitalization: The Oranjestad and San Nicolas “Exempt Regime”
The centerpiece of today’s launch is a 10-year profit tax exemption for redevelopment projects located in the designated city centers of Oranjestad (the capital) and San Nicolas (the historic industrial hub). This policy aims to reverse decades of aging infrastructure and convert vacant commercial properties into vibrant mixed-use spaces.
Key Benefits for Developers (2026–2035):
- Zero Profit Tax: Qualifying redevelopment income is fully exempt for 10 years.
- Dividend Withholding Exemption: Total relief from taxes on dividends distributed from exempt redevelopment entities.
- Transaction Tax Holiday (2026–2027): A two-year window featuring exemptions from Real Estate Transfer Tax and Turnover Taxes (BBO, BAVP, and BAZV) for qualifying property transfers.
- Flexible Depreciation: For projects not qualifying for the full exemption, the government offers accelerated depreciation of up to AWG 500,000 on renovation costs.
“This is not just a tax cut; it is a total reimagining of our urban cores,” said a spokesperson for the Aruba Investment Agency (ARINA). “We are providing the financial runway for the private sector to lead our urban renewal.”
The Startup Scheme: Fueling the “Promising Sectors”
Recognizing the need for a diversified economy, Aruba’s new Startup Tax Incentive Regime targets six “Promising Sectors”: Knowledge Economy, Agriculture, Circular Economy, Creative Industries, Logistics, and Niche Tourism.
Startups established on or after January 1, 2026, can access:
- Profit Tax Exemption: The first AWG 50,000 in annual profit is tax-free for the first five years.
- Enhanced Investment Deduction: A 20% deduction (up from 10%) on new business asset investments exceeding AWG 5,000.
- Loan Deductions: 50% of the principal of new business loans is deductible (up to AWG 30,000/year) if obtained from supervised Aruban credit institutions.
- BBO Relief: Small business exemptions for turnover under AWG 50,000 are now extended to qualifying corporate startups.
Compliance and “Substance” Requirements
To prevent Aruba from becoming a shell-company haven, the government has instituted strict compliance and “economic substance” requirements.
- Investment Minimum: Redevelopment projects must invest a minimum of AWG 500,000 or 50% of the property’s ground value.
- Local Employment: Startups must employ between one and three full-time local workers, depending on their turnover.
- Reinvestment Clause: Startups are required to reinvest at least 15% of gross turnover into business assets, training, or premises.
- Anti-Abuse: Benefits can be retroactively withdrawn if a company fails to maintain its single-purpose status or engages in unrelated business activities.
Immediate Reaction from the Investment Community
Offshore professionals and tax advisors have reported a surge in inquiries since the decrees were finalized in December. The 2026–2027 window for transfer tax exemptions is seen as a particularly tight deadline, forcing investors to expedite land acquisitions and project planning.
“The ‘all-in or all-out’ principle of these decrees means you have to be structured correctly from day one,” noted a senior tax partner at HBN Law & Tax. “We are seeing significant interest from creative industry professionals and agritech firms looking to use Aruba as a testing ground for the Caribbean market.”
FAQs: Aruba’s 2026 Fiscal Reform and Investment Incentives
Q: What are the two main tax incentive programs launched on January 1, 2026? A: The Government of Aruba introduced two distinct Ministerial Decrees:
- The Startup Tax Incentive Regime: Designed to remove fiscal barriers for new, innovative companies.
- The Urban Redevelopment Incentive: Aimed at stimulating renovation and adaptive reuse of aging real estate in downtown Oranjestad and San Nicolas.
Q: Which sectors qualify for the new Startup Scheme? A: The incentives are specifically tailored for “Promising Sectors” identified in the island’s National Strategic Plan. These include:
- Knowledge Economy: Technology testing, software development, and sustainable island solutions.
- Agriculture: High-tech farming, hydroponics, and agritourism.
- Logistics: Modernizing trade and shipping services.
- Circular Economy: Waste-to-energy and sustainable manufacturing.
- Creative Industries: Design, arts, and digital media.
- Niche Tourism: Specialized and sustainable travel experiences.
Q: What are the specific financial benefits for a qualifying startup? A: Qualifying startups can receive a Profit Tax Exemption on the first AWG 50,000 of annual profit for their first five years. Additionally, they can claim an Investment Deduction of 20% on new business assets (up from 10%) and a special deduction of 50% on the principal of new business loans (up to AWG 30,000 per year) obtained from Aruban credit institutions.
Q: What are the “Substance Requirements” for these incentives? A: To qualify, companies must demonstrate a real economic presence in Aruba. This includes having adequate tangible fixed assets on the island and a minimum number of qualified full-time employees (ranging from 1 to 3 depending on turnover). Furthermore, startups must reinvest at least 15% of their gross turnover into business growth, training, or premises.
Q: How do the Redevelopment Incentives work for Oranjestad and San Nicolas? A: These areas are now under an Exempt Company Regime. Qualifying developers receive a 10-year exemption from Profit Tax and Dividend Withholding Tax. For 2026 and 2027, there is also a complete holiday from Real Estate Transfer Tax and Turnover Taxes (BBO/BAZV/BAVP) for property acquisitions within these zones.
Q: Is there a minimum investment for the Urban Redevelopment program? A: Yes. To ensure substantial commitment, investors must commit a minimum of AWG 500,000 or 50% of the property’s ground value, whichever is higher. Projects that do not meet the full exemption criteria may still utilize accelerated depreciation of up to AWG 500,000 on renovation costs.
Q: What is the “All-In or All-Out” principle? A: This is a strict anti-abuse provision. It requires that a qualifying entity’s activities and assets be exclusively related to the approved redevelopment or startup project. Engaging in unrelated business activities or failing to maintain single-purpose status can lead to the retroactive withdrawal of all tax benefits.