ORANJESTAD – The Government of Aruba has officially announced a new beneficial fiscal policy aimed at stimulating long-term economic development and urban renewal in Oranjestad and San Nicolas.
The initiative, part of the AVP–FUTURO government’s 2025–2028 economic program, seeks to revitalize underutilized city-center areas by offering attractive tax incentives for redevelopment projects. The policy is designed to encourage sustainable investment, job creation, and tourism diversification while breathing new life into Aruba’s two historic urban centers.
The new measures will come into effect on January 1, 2026.
Focus on Oranjestad and San Nicolas
Oranjestad, Aruba’s capital, remains the island’s administrative and tourism center but has faced challenges related to aging infrastructure and vacant commercial properties. San Nicolas, once a major industrial hub, has experienced economic decline following refinery closures.
Key challenges addressed by the policy include:
- Aging and underused commercial buildings
- Limited housing and office space
- Reduced economic activity in city centers
- Untapped cultural and creative potential
Through this fiscal initiative, the government aims to reposition both cities as vibrant centers for living, working, tourism, and creative industries.
Key Tax Incentives Introduced
The beneficial fiscal policy offers temporary but substantial tax exemptions for qualifying redevelopment projects located within designated zones in Oranjestad and San Nicolas.
Main Incentives Include:
- 10-year exemption from profit tax and dividend tax
- 2-year exemption from transfer tax and turnover taxes (BBO and AZV)
- Flexible depreciation options for renovation and redevelopment costs
These benefits apply only to income and activities directly related to approved redevelopment projects.
Profit and Dividend Tax Exemptions
Eligible companies can receive a full exemption from profit tax and dividend withholding tax from 2026 through 2035, provided they:
- Operate exclusively as redevelopment entities
- Do not engage in unrelated business activities
- Invest a minimum of AWG 500,000 or 50% of the property’s ground value
This structure ensures transparency and supports genuine urban renewal.
Transaction Tax Relief
During 2026 and 2027, approved investors will benefit from exemptions on:
- Transfer tax
- Turnover tax (BBO)
- AZV destination levy
These measures significantly lower initial investment costs and encourage faster project execution.
Flexible Depreciation for Renovation Costs
Projects that do not qualify for full tax exemption may still benefit from flexible depreciation, allowing deductions of up to AWG 500,000 for renovation and repurposing expenses between 2026 and 2035.
Designated Redevelopment Zones
The policy applies strictly to areas designated in Aruba’s Spatial Development Plan, including:
- Downtown Oranjestad
- San Nicolas city center
Safeguards and Compliance
To prevent misuse, the policy follows an “all-in or all-out” principle, requiring:
- Single-purpose redevelopment entities
- Full ownership of the redevelopment property
- Timely project execution
- Compliance with financial and operational limits
Failure to meet these conditions may result in retroactive loss of tax benefits.
Expected Economic Impact
The government anticipates that the policy will lead to:
- Increased private and foreign investment
- Job creation in construction, tourism, and services
- Revitalized city centers
- Growth in cultural and creative industries
- Improved urban housing availability
The initiative aligns with Aruba’s broader goals of sustainable development, tourism diversification, and long-term economic resilience.
Conclusion
The introduction of this beneficial fiscal policy represents a decisive step toward revitalizing Oranjestad and San Nicolas. By reducing tax barriers and encouraging redevelopment, Aruba strengthens its position as a stable, forward-looking, and investor-friendly destination—delivering lasting benefits for residents, businesses, and visitors alike.
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