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