📢 TaxUpdate on Trade Goods Definition for Aruba

Change
A regulatory update has been issued by the Ministry of Finance that expands and clarifies the definition of trade goods for Aruba. The regulation must provide clear reasons why these changes were necessary or desirable. It does not, nor does it give any examples. From here on, it will be up to the tax authority, the tax practitioners, and the tax court to mold this further. Businesses must try to figure it out on their own as they go along.  This is likely to lead to another price increase by the companies.

Here’s a brief breakdown

1. Unchanged Resale Goods: Goods intended for business resale, where materially, the item remains unchanged, and its essential characteristics have not been altered after any processing or operations within the company.

2. Assembled or Processed Components: Parts assembled or processed within a company to create a new trade good intended for business resale.

3. Food & Beverage Processing: Any processing operation by a business concerning food and beverages intended for resale. Here, the supply of food and beverages is predominantly the main activity and is not secondary to providing a service.”

Clarity of the Regulation
– Unchanged Resale Goods: This point is clear. It specifies that the goods should remain materially unchanged after any processing within the company for them to qualify under this definition.

– Assembled or Processed Components: This section is also clear. It specifies that parts assembled or processed within a company to create a new trade good are included in the definition.

– Food & Beverage Processing: This is slightly more complex. It starts clear by mentioning the processing operation concerning food and beverages. The latter part about the supply of food and beverages being the main activity and not secondary to providing a service might be ambiguous. It could lead to questions like: How does one determine when the supply of food and beverages becomes secondary to a service?

Overall

The added value of this change is unclear to me and is a by-product of making legislation, which, as you may know, is similar to the process of making sausage 🌭. It may taste and look good, but you don’t want to be present when either sausage or legislation is made. In either case, you may end up with an upset stomach.