Puerto Rico VAT

Puerto Rico VAT Plans blocked

Puerto Rico’s plans to introduce VAT on the 1st June 2016 appear to have been scrapped.

Earlier this month legislators voted against the introduction of VAT to replace the current Sales and Use Tax, with an almost unanimous vote of 21 to 1.

However, there is still much confusion as to what will happen with Puerto Rico’s indirect tax regime as they are still in dire need of a way in which to raise funds to cover their rising debt, so a VAT regime could still be on the cards?

Puerto Rico Delay VAT Implementation Until June 1st

Puerto Rico aimed to introduce the implementation of Value Added Tax (VAT) or ‘IVA’ (its Spanish equivalent) on April 1st 2016, however, the Puerto Rican Treasury Department issued an Administrative Determination (DA16-04) on March 8th officially postponing this change until June 1st 2016. It is believed by some that the introduction of VAT could be postponed altogether.

The main reason for this postponement is so that the Legislature and Governors’ office have time to review a number of proposals for a tax reform that may supplement or replace the implementation of VAT altogether. Another issue that has affected the decision is the increasing concern shown by many businesses operating out of Puerto Rico at not being able to comply with their VAT requirements by April 1st. A 60-day grace period established within Act 72-2015 has allowed for this delay to be officially enforced.

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