An imputation payment company (IPC) is a regular limited liability company that is subject to Aruban profit tax against the regular profit tax rate of 28%. However, the shareholders of a qualifying IPC are entitled to an imputation payment by the Aruban government of 26/72 of the distributed dividends, if the company conducts certain by the Minister of Finance and Economic Affairs pre-approved activities.

Qualifying IPC activities:

• – Conducting a quality hotel;
• – Conducting an oil refinery;
• – Conducting a shipping company or conducting an aviation company;
• – Developing, acquiring, holding, maintaining and licensing of intellectual and industrial property rights, similar rights and usage rights;
• – Captive insurance activities;
• – Holding of shares, stocks or other equities;
• – Finance activities, different from a credit institution;
• – Portfolio investments, not being real estate or equity for the disposal of affiliated companies or persons.

Please note that some activities have certain requirements.

Benefits of an IPC:

An IPC is a regular limited liability company that is subject to Aruban profit tax against the regular profit tax rate of 28%.

• However, in the case of an IPC, the shareholders of the IPC are entitled to an imputation payment of 26/72 of the distributed dividends if the IPC conducts one of the above mentioned predefined activities and if other additional requirements are met. This means a 26% refund. As a result of this a possible effective tax rate of 2% on the profits can be realized by the IPC. Please note that dividend withholding tax (0-10%) might be applicable. This method of double taxation avoidance meets the EU and
• OECD standards.

In case you are contemplating one of the above-mentioned activities please contact us in case you require in depth information on the requirements, timing and costs involved in your specific situation.

Example-calculation on a possible 2% effective tax rate by using an IPC

*26/72X72