VAT Now Scheduled to Take Effect on June 1, 2016
Puerto Rico’s Treasury Department issued Administrative Determination DA16-04 on March 8, 2016, officially postponing the effective date of the VAT (IVA in Spanish) from April 1, 2016, until June 1st, 2016 and may suspend VAT implementation altogether. According to the Treasury Department, the delay was effectuated, in part, to allow the Legislature and Governor’s Office time to review new proposals regarding a number of alternative tax reform measures that may supplement, or possibly completely scrap, the VAT. The move was also clearly in response to concerns expressed by many businesses operating in Puerto Rico regarding their ability to comply with the VAT requirements by April 1. This latest notification also indicates that all new businesses, or businesses seeking to renew certifications that expired as of December 31, 2015, should do so according to the procedures currently in place under the existing sales tax law. As of March 1, 2016, the Department is not accepting any applications to renew certificates that expire during 2016. This includes the Re-seller for Municipal IVU Exemption Certificate, Certificate for Exemption to Manufacturing Plants, and the Certificate for Eligible Re-sellers. Any certificate expiring in 2016 can continue to be used until such time as the Department of Treasury announces new requirements and procedures. Any prior notices issued by the Department contrary to the information provided in DA 16-04 is no longer considered valid. To that end, the Notice specifically provides that the information contained in DA 15-26 regarding the implementation of the VAT on April 1 should be considered void. Likewise, DA 16-01 should be considered partially void to the extent that the current notice provides contrary instructions. Stay tuned as we continue to monitor developments related to the implementation of a VAT (or other tax reforms) in the Commonwealth of Puerto Rico.
