The Caribbean territory Aruba has released instructions that will see it tightening its regulation of large multinational corporations registered there.
This follows action taken by The Cayman Islands and Bermuda, which this year introduced new registration requirement primarily in relation to categories of investment funds that previously did not require any registration or regulation.
Aruba has announced new instructions regarding the completion of transfer pricing documentation and released model templates for completion by multinational corporations registered there and carrying out investments. In announcement number 86 of 2019, the Government of Aruba confirmed the introduction of a transfer pricing documentation regime.
This regime is in line with that proposed by the Organisation for Economic Co-operation and Development (OECD) in Base Erosion and Profit Shifting (BEPS) Action 13. Under BEPS Action 13, all large multinational enterprises (MNEs) are required to prepare a country-by-country (CbC) report with aggregate data on the global allocation of income, profit, taxes paid and economic activity among tax jurisdictions in which it operates.
This CbC report is shared with tax administrations in these jurisdictions, for use in high level transfer pricing and BEPS risk assessments. In the case of Aruba, its CbC regime is effective for fiscal years ending on or after January 1, 2019.
The instructions and template includes examples of the master file, local file, and country-by-country report multinational groups should complete. The CbC report should be filed annually and contain a breakdown of the amount of revenue, profits, taxes, and other indicators of economic activities for each tax jurisdiction in which the multinational group does business.
Under the OECD framework, the CbC report should be filed by companies headquartered in Aruba, whose consolidated group turnover exceeds EUR750 million, or where a group has operations in Aruba but will file its report in a territory that lacks an agreement for the exchange of CbC reports with Aruba.
The decree implementing the new regulation on additional documentation requirements for transfer pricing was published in Aruba’s Official Gazette on December 23, 2019,