Grant Thornton recently submitted a compliance assessment to AHATA regarding the tourist levy and environmental levy collected from every visitor to the island, which, according to AHATA is handed over to the tax office monthly, by all its members, while many mom and pop vacation rentals, perhaps even large operations, did not get around to signing up with the tax office for the purpose of compliance, and have it on their list of things to do, perhaps, in the future.
The vacation rental industry on Aruba grew exponentially, in recent years. And in the December 2022 report by the Aruba Tourism Authority that segment of the market experiences a 40.7% growth, with 2,361.202 nights spend on the island at alternative accommodations, that’s not a hotel, nor timeshare. Which means that 25% of our visitors opted to stay at vacation rentals.
AHATA would like to see more compliance overall, and in an effort to help with solutions, it commissioned the drafting of recommendations, designed to extract more money for the government and even the playing field.
Why shouldn’t vacation rentals be taxed as much as the hotels?
They should carry their share of Aruba’s tax burden.
While AHATA’s original members were the hotels, it now also includes a number of vacation rental members.
This proliferation of vacation rentals has taken years, it started slow with a room here and there and now there are also dozens of management offices handling hundred of rentals for absentee owners.
Many of them use third part platforms such as Booking.com, and Airbnb.
Some of the locals, operating vacation rentals took the time to register at the tax office, and pay their two invoices on line, every month.
But because of lack of compliance, many fell between the chairs.
AHATA’s argument is absolutely correct: If GOA had managed to tap all vacation rentals for 12.5% room tax and $3 a day environmental fee, we would not have to raise the BBO/BAZV/ BVAP to 7%
We would have plenty of money to go around.
AHATA in its quest for solutions commissioned a compliance assessment and GT included an analysis and recommendations regarding the issues at hand.
Basically, they want to make it easy and user friendly, by getting the GOA and the Tax Authorities to enter into a collaboration agreement with the third-party service providers, such as Airbnb, let them collet the tax. Then these third-party service providers can remit the tourist levy and the environmental levy on behalf of property owners.
In fact, there have already been two MOU’s with Airbnb, where the company agreed to collect the tax and hand it over.
GT also recommends a new government department dedicated to the enforcement of vacation rental registration. That department will facilitate the issue of permits, and collect the funds, it will also be the point of contact for the owners of vacation homes and other organizations involved in the tourism industry.
GT also recommended a digital platform, a singular page that’s user-friendly with various relevant links, an idiot proof system. And of course, once registered all property owners must file a yearly tourist levy and environmental levy tax return. More reports, more better.
Now, GOA has to amend relevant legislation, in order for it to happen. The amendments may also cover a limited retail permit, of some food and drink, sales at the property.
Above all the new article in the State Ordinance Tourist Levy must state that: “The person who operates a hotel or accommodation is required to register digitally for the tourist levy before exploiting the hotel or accommodation.”
You must register, FIRST, get a permit, then open your door.
We do things backwards here.
