The Caribbean Sea is dotted with thirteen island nations and overseas territories. Aruba is one of the island countries located on the southern Caribbean Sea some 27 kilometers north of Venezuela. Aruba is one of the four constituent territories of the Kingdom of Netherlands and is part of the Lesser Antilles.
The total area of the country is 180 sq. km inhabited by around 100,000 people. Aruba hosts stunning beaches, a warm climate, colorful culture, and a vibrant nightlife; ingredients that pull millions of tourists each year, from around the world.
Despite the size, Aruba has a very well laid out infrastructure including an airport, healthcare, a stable political system, transport, and a road network. Officially recognized languages are Dutch and Papiamento, while English and Spanish are also widely spoken and understood.
Types of business structures in Aruba
There are four types of business formats entrepreneurs and investors can choose from as per their needs.
| S# | Type of business structure | Local name | Min. paid-up capital required |
| 1. | Sole Proprietorship | Eenmanszaak | No paid-up capital required |
| 2. | Partnership | Maatschap | Vennootschap onder firma (V.O.F.) | No paid-up capital required |
| 3. | Limited Liability Company | Besloten Vennootschap (B.V.) | $8,500 |
| 4. | Corporation | Naamloze Vennootschap (N.V.) | $28,000 |
Sole Proprietorship
A sole proprietary business is a one-man show as it is owned and managed by the owner. In case of debt or loss, the owner is subjected, by law, to compensate them with their personal assets if required. This format of business is quick to commence and prone to very few regulations.
Partnership
Two or more people forming an arrangement whereby they contribute capital to run a business is called a partnership. A partnership business can be either a general partnership, where all partners are equally responsible for liabilities. Or it may be a limited partnership where partners with limited status are responsible only for the extent of their contributions.
Limited Liability Company
An LLC is a regulated and structured business format that requires adhering to a series of rules before and after formation. The law defines the roles of executives, management, and shareholders. The biggest advantage of an LLC is that the owners are separate from the company, and are not personally responsible for any liabilities arising from the business.
Corporation
A corporation is similar to a public limited company elsewhere. It is by far the most complex business structure compared to other formats requiring to comply with regulations, laws, and legal frameworks. Large companies or capital-intensive ventures prefer corporations over LLCs as they are permitted to raise capital through the public by offering their shares in the stock market.
Costs involved in registering and incorporating a company in Aruba
The costs of registering a company depend on the type and size of the company and the nature of the business. Special permits, legal cover, and the extent of services required, all influence the cost.
Here are some costs that are more likely to be incurred
Registration fee
The fee for registering a new company with the Aruba Chamber of Commerce and Industry is approximately $140.
Notary fees
A notary is required to draft the articles of association and other legal documents for the incorporation of a company. Notary fees can range from $560 to $1,120, depending on the complexity of the company’s legal structure.
Government fees
The government charges a fee for the incorporation of a company. The fee for an LLC is approximately $730, while the fee for a corporation is approximately $1,540.
Professional fees
If you use an incorporation agent or lawyer to help with the process, there will be professional fees to consider. These fees can range from a few hundred to a few thousand dollars, depending on the level of service and expertise required.
Overall, the total cost of registering and incorporating a company in Aruba can range from approximately $1,000 to $3,000 or more, depending on the specific circumstances.
Cost of doing business in Aruba
The running cost of business also known as operational expenditure depends and varies according to the size, nature, and location of the company. A few expenses that are inevitable are listed here:
Labor costs
Aruba has a minimum wage of around $1,000 per month, which applies to all workers regardless of their industry or occupation. Other labor costs may include social security contributions, health insurance, and other benefits.
Rental costs
The cost of renting commercial property can vary depending on the location and the type of property. According to recent reports, the average cost of renting office space in Aruba is approximately $30 to $40 per square meter per month.
Utilities
The cost of utilities such as electricity, water, and telecommunications can vary depending on usage and the service providers. It is worth noting that Aruba relies heavily on imported fossil fuels, which can make energy costs relatively high.
Taxes
Businesses operating in Aruba are subject to several taxes, including corporate income tax, turnover tax, and social security contributions. The tax rates and regulations can vary depending on the specific circumstances of the business.
Compliance costs
Businesses operating in Aruba must comply with various regulations and requirements, such as obtaining permits and licenses, complying with labor laws and environmental regulations, and keeping financial records. These compliance costs can vary depending on the industry and the size of the business.
Overall, the cost of doing business in Aruba can be relatively high compared to other countries in the region due to factors such as high energy costs and a relatively high cost of living. However, Aruba’s favorable tax system, stable political environment, and strategic location can also make it an attractive destination for businesses looking to operate in the Caribbean or Latin America.
Benefits of registering a company in Aruba
There are several benefits of having a company in Aruba, including:
Strategic location
The location of Aruba makes it an ideal hub for companies looking to expand into the Caribbean or Latin America. Its proximity to the United States also makes it a convenient location for the North American market.
Favorable tax system
Aruba has a tax system that favors businesses due to a low corporate income tax rate of 25%. There is no withholding tax on dividends, interest, or royalties, and no capital gains tax on the sale of shares or assets. Additionally, Aruba has signed several double taxation treaties, which can help to avoid double taxation.
Stable political and economic environment
Political stability is another reason Aruba is known for. A well-developed legal system and a low crime and corruption rate make Aruba an attractive location for foreign and local investors.
Skilled workforce
Around 96% of the local population in Aruba is literate. The country also has a multicultural and multilingual population, which can be an advantage for businesses looking to operate in multiple languages and cultures.
Business-friendly environment
Aruba has a very business-friendly environment. Streamlined procedures for setting up and registering a company, as well as a supportive regulatory framework for business operations, make it easier for investors to navigate through the system.
