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Puerto Rico To Table Legislation To Introduce VAT

by Mike Godfrey, Tax-News.com, Washington

06 February 2015


Puerto Rico's Secretary of the Treasury, John Zaragoza Gomez, on February 2, 2015, announced the launch of "a massive educational campaign" on the territory's plans to overhaul the structure of the tax system with the introduction of a new value-added tax (VAT).

The VAT would replace Puerto Rico's seven percent sales tax rate, with a higher rate expected. According to Zaragoza Gomez, the introduction of VAT will enable the Government to substantially lower tax rates for individuals and companies, lifting a total of 800,000 taxpayers out of the income tax net.

Launching the publicity drive, he said: "This campaign is part of a broad effort of communication and openness that began several months ago and continues today. There are still details to finalize but at this early stage, before the establishment of the project, we Puerto Ricans know the basic principles of this transformation, [of placing an] onus on consumption rather than on income. In other words, with the new system, VAT will be paid not by what you earn, but what you eat, leaving [it] in the hands of each individual to decide how to use their money."

He confirmed that the Treasury Department is currently developing a draft bill for the implementation of VAT, which will be tabled before the legislature on or before February 15.

TAGS: individuals | VAT rates | tax | value added tax (VAT) | sales tax | education | tax rates | Puerto Rico

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