FAQ's foreign exchange commission

What types of payments fall under the scope of article 2 of the State Ordinance on the Foreign Exchange Commission?

Payments to abroad that fall under the scope of article 2 of the State Ordinance on Foreign Exchange Commission. They encompass:

• payments of residents denominated in the Aruban florin or any type of foreign currencies (e.g. USD/EUR/ANG) to abroad, for example the purchase of foreign currency, the purchase of goods, services rendered, professional fees, principles and interests on loans, advances, and dividend payments.
• Deposits or transfers of residents to non-resident accounts held at the local commercial banks, for example student accounts of students living abroad, and pension accounts of pensioners living abroad.

When do non-residents pay the foreign exchange commission?

According to article 8 of the State Ordinance Foreign Exchange Commission, if a non-resident makes a payment to abroad with domestic currency, he/she will be considered a resident and hence must pay the foreign exchange commission. Unless, he/she proves to have acquired the domestic currency by conversion of one or more foreign currency.

How is the foreign exchange commission calculated?

The foreign exchange commission is calculated by multiplying 1.3 percent (%) with the counter value in Aruban florin of the payments made to abroad. The official selling exchange rates of the foreign currencies to the public is used to calculate the counter value in Aruban Florin.

Is the currency relevant for the collection of the foreign exchange commission?

No, the currency is not relevant. According to article 2 of the State Ordinance on Foreign Exchange Commission, all payments from residents to abroad or to non-resident accounts held at the local commercial banks are subject to the levy of the foreign exchange commission.

Are foreign account holders that notified their foreign bank accounts and/or their foreign intercompany accounts to the CBA exempted from the payment of the foreign exchange commission?

Foreign account holders: A company that notified its foreign bank accounts and/or its foreign intercompany accounts to the CBA, and complies with the provisions to obtain a general foreign exchange license for foreign account holders for its transfers to and from its notified bank accounts and/or intercompany accounts via local commercial banks, as is specified in the Decree concerning Foreign Exchange Transactions 2013/K.2 (General Foreign Exchange License).

In that case, the local commercial banks do not charge the foreign exchange commission on the transfers to own accounts effectuated by the foreign account holders. However, this does not mean that these institutions are exempted from the payment of the foreign exchange commission. They must pay the foreign exchange commission on the transactions effectuated from their notified foreign bank accounts and intercompany accounts. These institutions must settle the foreign exchange commission due directly with the CBA as stipulated in the CBA’s guidelines for Foreign Account Holders. Guidelines for the declaration and payment of foreign exchange commission by the Foreign Account Holders are available here.

Are Free Zone companies exempted from the payment of the foreign exchange commission?

According to the State Ordinance on Free Zones (AB 2000 no. 28), the Free Zone companies in a possession of a license from Free Zone Aruba can request an exemption from the payment of foreign exchange commission. This exemption applies only to payments to abroad that are specifically related to the free zone activities of the company. The aforementioned payments can be classified as:

• Import of goods for re-export. The import of goods for re-export excludes goods sold on the local market as stipulated in article 6 of the State Ordinance on Free Zones (AB 2000 no. 28).
• Provision of services.

All other payments by the free zone companies fall under the scope of article 2 of the State Ordinance on the Foreign Exchange Commission (AB 1990 no GT 5), amongst other dividend payments, maintenance of software and hardware, legal fees. The guidelines for the declaration and payment of foreign exchange commission by the free zone companies are available here.

How can a Free Zone company request an exemption from the payment of the foreign exchange commission?

The free zone company should submit to the CBA an official written request for exemption from the payment of foreign exchange commission. The Free Zone company should include in its request its Free Zone of Aruba license. The request should be sent via email informationcenter@cbaruba.org.

Should Aruba Tax Exempt Companies (AVVs) and Offshore companies pay the foreign exchange commission?

Based on article 19 of the State Ordinance on Foreign Exchange Transactions (AB 1990 no. GT 6), AVV’s and Offshore companies registered at the Chamber of Commerce can submit an official written request to the CBA to be classified as non-residents and therefore be exempted from the payment of foreign exchange commission. This request should be sent via email legalservices@cbaruba.org.

Can an institution be exempted from the payment of the foreign exchange commission?

According to article 11 of the State Ordinance on Foreign Exchange Commission (AB 1990 no GT 5), only the Minister of Finance, after having consulted with the CBA, may grant an exemption to certain institutions or groups of persons from their obligation to pay the foreign exchange commission through the issuance of a State Decree containing General Administrative Orders. There are already certain groups of institutions (mainly government-related) exempted by State Decree Exemptions on Foreign Exchange Commission (AB 1995 no. 68). The list of institutions and transactions exempted from the payment of foreign exchange commission is here.