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 – Tax reform

Puerto Rico VAT Implementation

Puerto Rico has now advanced its plans to implement VAT, with it expected to be introduced in 2016, they have issued a bill to withdraw the current Sales and Use tax. This has been implemented in line with their plans to shift from an income based system to a consumption tax based system. In order to prepare for the VAT introduction they have also risen the current SUT tax from 7% to 16% which will come into effect on the 1st of April 2015. There are several key points in the new indirect tax regime:

• The new VAT rate will be 16%
• The current SUT rate will increase from 7% to 11% on 1/4/15
• Exports will be exempt from VAT but Imports will be liable
• The supply of taxable goods or services will be subject to VAT
• VAT filings will be monthly, due no later than the 20th of the month
• There will be a facility to reclaim any VAT credits
• Will eliminate a significant number of exemptions, exclusions and the preferential tax treatment of many items.
• VAT will be imposed on every taxable transaction Continue Reading