Puerto Rico to incorporate VAT

tax reformPUERTO RICO- The Puerto Rican government has been working on a tax policy overhaul. Currently in the fine-tuning phase, the government is hopeful to get the bill approved by the end of April 15, 2015.  Changes would affect most types of tax, including the addition of a Value Added Tax (VAT) system.

The VAT levies sales tax at each stage of production, therefore enforcing a high compliance rate.  VAT would be collected when goods are imported to the island and would be applied to a broad range of services as well.  There would be some exemptions for exported goods/services, financial services, residential housing, and small businesses.

The presentation documents released by the government highlight a reduction in both individual & corporate gross profits tax rates.  Analysis is still underway for alternatives for excise tax and property tax.

For more information, visit the Puerto Rico Treasury Secretary Juan Zaragoza Gomez’s website: http://www.transformacionpr.com/. (Note: the website is in Spanish).

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