Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

ARUBA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of January 31, 2007)

Status under IMF Articles of Agreement
Article VIIIYes.
Exchange Measures
Restrictions and/or multiple currency practicesThe staff report for the 2005 Article IV consultation with the Kingdom of the Netherlands—Aruba states that as of April 11, 2005, Aruba maintained a foreign exchange restriction arising from the foreign exchange tax on payments by residents to nonresidents. This tax, which amounts to 1.3% of the transaction value, was introduced when Aruba was part of the Netherlands Antilles, to generate revenue for the government. Aruba adopted it after gaining autonomy (status aparte) in 1986. Since then, it has served as a source of general tax revenue for the central government of Aruba. (Country Report No. 05/204)
International security restrictions
Other security restrictionsYes.
References to legal instruments and hyperlinksState Ordinance Foreign Exchange Commission (AB 1990 No. GT 5); www.cbaruba.org.
Exchange Arrangement
CurrencyThe currency of Aruba is the Aruban florin.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe florin is pegged to the dollar at Afl. 1.79 per $1. The Centrale Bank van Aruba (CBA), the central bank, deals with local commercial banks within margins of 0.002795% on either side of parity.
Exchange taxA foreign exchange commission of 1.3% applies on all payments to nonresidents, including payments made through a foreign bank account or exchange office, checking account transfers in foreign currencies, and payments by a foreign company on behalf of residents settled through intercompany accounts. Certain payments, such as those for transactions settled in Netherlands Antillean guilders and payments of certain government-related companies, are exempted from this commission.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinksState Ordinance Governing the Monetary System (AB 1991 No. GT 34); State Decree for Fixing Parity of the Aruban Florin (AB 1992 No. GT 6); State Ordinance Foreign Exchange Commission (AB 1990 GT 5); www.cbaruba.org.
Arrangements for Payments and Receipts
Prescription of currency requirements
Controls on the use of domestic currencyn.a.
Use of foreign exchange among residentsLegal entities that hold a hotel or casino license are allowed to accept and return change in U.S. dollars and Venezuelan bolívares.
Payments arrangementsNo.
Administration of controlThe CBA administers foreign exchange control.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotes
On exports
Domestic currencyThe exportation of domestic banknotes is prohibited.
Foreign currencyThe exportation of foreign banknotes requires a license, except for traveling purposes.
References to legal instruments and hyperlinksState Ordinance Governing the Monetary System; State Decree on Acceptance of Foreign Currency (AB 1991 No. GT 10); State Ordinance Foreign Exchange Transactions (AB 1990 No. GT 6); www.cbaruba.org.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyResidents are allowed to open foreign exchange accounts, provided these accounts are funded with foreign currency.
Held abroadThe opening of an account abroad must be reported to the CBA. Approval is not required, but holders of accounts abroad must apply to the CBA if they wish to be exempted from the requirement that they collect foreign claims as soon as they fall due and transfer and sell them to a local foreign exchange bank. Unless an exemption has been given, payments to nonresidents in foreign exchange should be made from an authorized bank’s account or from an account of a foreign bank that operates in the country of the transaction, or to a nostro account of a nonresident held with the authorized bank.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyThese accounts are not allowed.
References to legal instruments and hyperlinksState Ordinance Foreign Exchange Transactions, Guidelines and Notices Concerning Foreign Exchange Transactions; www.cbaruba.org.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyBalances in these accounts are fully convertible.
Blocked accountsNo.
References to legal instruments and hyperlinksState Ordinance Foreign Exchange Transactions, Guidelines and Notices Concerning Foreign Exchange Transactions; www.cbaruba.org.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Licenses with quotasThe importation of eggs may be subject to quotas, depending on the domestic supply.
Import taxes and/or tariffsYes.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsUnless exempted, residents are required to surrender export proceeds either by selling to a foreign exchange bank or exchange office, against florins, within a period of eight working days after the day of receipt or by depositing them into a foreign currency account with the CBA or a foreign exchange bank in the name of a resident.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesNo.
Export taxes
Other export taxesEffective January 1, 2007, all exports are subject to a turnover tax.
References to legal instruments and hyperlinksState Ordinance Foreign Exchange Transactions; www.cbaruba.org.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Investment-related payments
Prior approvalFor the transfer of dividends and profits, a declaration to the CBA is required.
Indicative limits/bona fide testInterest payments on all types of foreign loans may be effected if a permit has been obtained from the CBA for the loan. As regards profits and dividends, financial statements should be submitted to the CBA indicating the amount involved. In the case of depreciation of direct investments, a special license is required if the amount of the transaction exceeds the authorized ceiling.
References to legal instruments and hyperlinksState Ordinance Foreign Exchange Transactions; www.cbaruba.org.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsUnless exempted, residents are required to surrender export proceeds either by selling to a foreign exchange bank or exchange office, against florins, within a period of eight working days after the day of receipt or by depositing them into a foreign currency account with the CBA or a foreign exchange bank in the name of a resident.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksState Ordinance Foreign Exchange Transactions; www.cbaruba.org.
Capital Transactions
Controls on capital transactionsTransactions of less than Afl. 300,000 or its equivalent in foreign currency a year for natural persons and Afl. 750,000 or its equivalent in foreign currency a year for juridical persons (excluding commercial banks and institutional investors) may be carried out without CBA authorization. These ceilings are applicable to all capital transactions with nonresidents; a special foreign exchange license issued by the CBA is required for capital transactions exceeding these ceilings.
Repatriation requirementsYes.
Surrender requirements
Surrender to the central bankThe CBA may require the divestment, repatriation, and surrender to the CBA of proceeds from direct investments by residents abroad.
Surrender to authorized dealersn.a.
Controls on capital and money market instrumentsThere are controls on all these transactions.
Controls on derivatives and other instrumentsControls apply to all these transactions.
Controls on credit operationsControls apply to all these transactions.
Controls on direct investment
Outward direct investmentThe CBA may require divestment, repatriation, and surrender of proceeds to the CBA.
Inward direct investmentYes.
Controls on liquidation of direct investmentYes.
Controls on real estate transactionsControls apply to all these transactions.
Controls on personal capital transactionsPersonal capital transactions must be effected through the banking system.
LoansControls apply to all these transactions.
Settlements of debts abroad by immigrantsYes.
References to legal instruments and hyperlinksState Ordinance Foreign Exchange Transactions, Notice Concerning Foreign Exchange Transactions 02/K.1; www.cbaruba.org.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Borrowing abroadYes.
Lending to nonresidents (financial or commercial credits)A foreign exchange license is required for loans granted by commercial banks to nonresidents exceeding the amount of Afl. 1 million a year or its equivalent in foreign currency, as well as for certain transfers or sales of local financial instruments, such as loans, bonds, and notes to nonresidents.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsYes.
Liquid asset requirementsYes.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsYes.
Liquid asset requirementsYes.
Investment regulations
In banks by nonresidentsThe CBA’s prior approval is required for any investor to hold or acquire a qualified holding in a bank or insurance company.
Open foreign exchange position limits
On resident assets and liabilitiesBanks are not allowed to have a negative foreign exchange position.
On nonresident assets and liabilitiesBanks are not allowed to have a negative foreign exchange position.
Provisions specific to institutional investors
Insurance companies
Limits (max.) on investment portfolio held abroadAccording to the 40%–60% investment rule, a progressive scale is used to determine the required limit on investment abroad. Institutional investors are not allowed to invest abroad more than approximately 60% of their total liabilities for the first Afl. 10 million or its equivalent. The limit is 50% for the second Afl. 10 million in liabilities and 40% for the remaining funds.
Limits (min.) on investment portfolio held locallyThe amount to be invested locally is determined by the 40%–60% investment rule, in relation to the total liabilities of the investor. Insurance companies must invest 40% of the first Afl. 10 million in liabilities, 50% of the second Afl. 10 million in liabilities, and 60% of the remaining liabilities locally.
Currency-matching regulations on assets/liabilities compositionNo significant currency exposures are allowed.
Pension funds
Limits (max.) on investment portfolio held abroadThe regulations related to insurance companies apply.
Limits (min.) on investment portfolio held locallyThe regulations related to insurance companies apply.
Currency-matching regulations on assets/liabilities compositionNo significant currency exposures are allowed.
Investment firms and collective investment funds
Limits (max.) on investment portfolio held abroadThe regulations related to insurance companies apply.
Limits (min.) on investment portfolio held locallyThe regulations related to insurance companies apply.
Currency-matching regulations on assets/liabilities compositionInvestment companies do not yet fall under CBA supervision.
References to legal instruments and hyperlinksState Ordinance Foreign Exchange Transactions, Guidelines and Notices Concerning Foreign Exchange Transactions; www.cbaruba.org.
Changes during 2006
No significant changes occurred in the exchange and trade system.
Changes during 2007
Exports and export proceedsJanuary 1. Exports of goods were made subject to a turnover tax.

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