Unofficial translation.
ORANJESTAD – Tuesday, August 1, 2023, the BBO at the border will come into effect, and it is announced that the collection of BBO, BAVP, and BAZV will commence when importing products to Aruba. BBO at the border is not a new concept; however, some changes have been made to the existing BBO/BAVP and BAZV laws.
Both the Tax Department (DIMP) and the Customs Department (DAA) are involved in the implementation of these law changes and work closely together to ensure good supervision and execution of the law.
It is important for the general community, especially for traders, to be aware of the law changes and the new processes associated with them.
For practical reasons, hereafter, only BBO will be mentioned, but this includes the three types of taxes, namely: BBO, BAVP, and BAZV.
What is BBO at the border, and when is it payable?
According to the law changes, there are two instances when BBO must be paid:
1. When importing products into Aruba.
2. When a trader sells their products or services within the scope of their business in Aruba.
These are the two “taxable facts” recognized by the BBO law from now on. The first point represents the new part that has been added to the law, and this is what we refer to as the collection of “BBO at the border.”
What is the BBO rate?
As known, from January 1, 2023, the combined BBO/BAVP and BAZV rate is 7%. The distribution of the BBO/BAVP and BAZV rates is as follows:
– BBO: 2.5%
– BAVP: 1.5%
– BAZV: 3%
Who pays BBO at the border?
As indicated, the importation of products is what triggers the collection of BBO starting on August 1, 2023. This means that every importer, whether a trader or a private individual, will have to pay BBO at the border when importing products to Aruba.
The Customs Department will collect import duties and/or excise taxes along with BBO. The basis for collecting import duties and excise taxes is the “customs value.” This same basis also applies to BBO at the time of importation. If the customs value of a product is Afl. 2,500, Customs will charge 7% of 2,500 = Afl. 175 as BBO. It is important to note that the calculation of the customs value remains the same, and no changes have been made.
If Customs later adjusts the customs value, it will also have implications for BBO at the border. If an importer has a particular situation, for example, if they are exempted from import duties, then they will not pay import duties or BBO at the border. The Customs Department will provide more information about customs matters.
Right of deduction
A trader who pays BBO at the border has the right to deduct it when making their BBO declaration at the Tax Department. This is something new in the BBO law. The right of deduction applies to all commercial products, called “handelsgoederen,” that the trader has imported. A commercial product is one that is intended for resale to customers.
Private individuals do not make BBO declarations, so the right of deduction does not apply to them.
Example
A supermarket imports cans of beans to sell to its customers. The supermarket also imports a freezer for storing food in its store. The BBO paid at the border on the cans of beans is deductible. However, the BBO on the freezer is not deductible in the BBO declaration because the freezer is not intended for resale to customers and will be used for the company’s own purposes.
Company registration
Traders who are not registered with the Tax Department must register their company with the department to be able to deduct the BBO they paid at the border. Small traders who currently do not pay BBO because their sales volume is below Afl. 50,000 per year can voluntarily choose to be registered for BBO and thereby obtain the right to deduct BBO when importing commercial products. Once a small trader is registered for BBO, they have the obligation to submit their BBO declaration monthly, just like any other trader. A small trader who requested registration for BBO cannot request to revoke that decision because they want to stop declaring and paying BBO. The Tax Department will not change this. Once registered, the small trader remains registered for BBO.
To register a company, the Tax Department has a special digital form for this purpose. More information will follow in the coming days.
Data transfer
The Customs Department records the BBO payments made at the border through the “Asycuda World” system and sends the data to the Tax Department at the end of each month. The digital systems of both the Customs and Tax Departments have been configured so that data transfer happens automatically while considering security standards. This way, the data will also be processed immediately in the BBO declarations of all traders. For this reason, it is of utmost importance for every importer to provide their correct personal identification number to their broker, who is responsible for customs declarations on their behalf.
It is essential to mention that the date of payment at Customs is crucial. If a trader imported products in August and the customs duties were paid in September, the BBO payment at the border for those products will appear in the BBO declaration of September.
BBO Declaration in the “BO Impuesto” portal
Starting now, the BBO declarations will be visible in the “BO Impuesto” portal on the 2nd day of each month. If this date falls on the weekend, it will be the following working day. The declaration for August 2023 will be visible in the “BO Impuesto” portal from September 4, 2023. The deadline for submitting this declaration is September 15, 2023.
How to fill out the BBO declaration?
In the BBO declaration, a trader will see the total amount of BBO they paid at the border, both for commercial and non-commercial products. They can also find a specification of the customs documents. Therefore, traders do not need to make calculations of the BBO payments made at the border; the total amount will be automatically populated in the declaration.
Example
A supermarket imported cans of beans with a customs value of Afl. 4,000.
The supermarket sold the cans of beans for Afl. 6,000.
The BBO paid at the border on the cans of beans is Afl. 280 (7% of Afl. 4,000).
The BBO declaration system will be as follows:
– Exempted turnover: 0.00
– Taxable turnover: 6,000.00
BBO/BAVP/BAZV: 420.00 (7% of 6,000)
BBO deduction for commercial products: 280.00 -/- (paid at Customs)
BBO to be paid to DIMP: 140.00
Therefore, the trader pays the same amount of Afl. 420, but now in two parts: at the time of importation and when selling the product. The total amount of BBO paid at the border is 100% deductible when
it comes to commercial products. If a product is not commercial, the trader needs to make corrections when filling out the BBO declaration.
BBO at the border on commercial products (handelsgoederen) is an advance payment and not an additional tax. Therefore, there is no fiscal reason for traders to increase their prices.
BBO Refund
It may happen that a trader imported commercial products but didn’t manage to sell enough during a month. In such a case, the total amount of BBO paid at the border might be higher than the sales volume for that month.
Example of a BBO declaration:
– Exempted turnover: 0.00
– Taxable turnover: 800.00
BBO/BAVP/BAZV: 56.00
BBO deduction for commercial products: 250.00 -/- (paid at Customs)
Refund or to be offset: 194.00
In this example, the trader is entitled to receive a refund of Afl. 194. The Tax Inspector will issue a “Refund Decision” for this amount. The trader will receive this amount within one month after submitting the BBO declaration for the respective month.
It should be noted that tax refunds are processed according to the law. This means that if the trader has any outstanding tax liability, the Receiver will deduct that amount from the refund first. The remainder will be automatically paid to the trader via their bank. If there are no outstanding liabilities, the trader will receive the full refund amount within the stipulated period.
Objection to BBO
It is not possible to submit an objection to the BBO paid at the border at the Tax Department. Since the basis for the collection is the “customs value,” if a trader disagrees with the customs value, they should submit their objection to the Customs Department. As for BBO declarations, a trader can submit an objection against their own declaration to the Tax Department. In the case of a “Refund Decision,” it is not possible to submit an objection or appeal.
BBO remains deductible as an operational expense
BBO is an operational expense (bedrijfskosten). There have been no changes in the law regarding this aspect. Therefore, all BBO paid by traders, whether at the border or when selling products or services, remains deductible as operational expenses (bedrijfskosten) for the company. BBO paid at the border on non-commercial products (like the freezer in the above example) is also deductible as an operational expense.
When traders prepare their annual accounts (jaarrekening) for their company, they include these expenses, which reduce their overall profit. This means they will pay less income tax or profit tax as a result.
In conclusion
The Tax Department expresses gratitude to the Ministry of Finance, as well as to the staff of the Tax Department and strategic partners in the field of digitalization, who have worked hard in recent months to implement all necessary preparations for the changes to the BBO law as part of the 2023 Tax Plan. The Tax Department also thanks the Customs Department for their close collaboration on the collection of BBO at the border and data transfer.
In the coming weeks, the Tax Department will continue to provide more detailed information about BBO at the border and the BBO declaration. It is recommended to check the frequently asked questions on the website impuesto.aw. All official news will be published on impuesto.aw and/or the Facebook page of the Tax Department. If you have any questions, you can call 5227424 or 5227423 or reach out via WhatsApp at 592 8200.
Management of the Tax Department
July 30, 2023.
Source: impuesto.aw
