The Puerto Rico Senate has overridden the veto of the Governor – there will be no introduction of VAT in Puerto Rico on June 1. The current Sales and Use Tax as well as the Business Tax will continue after June 1.
All good news from the group of finance ministers of all 28 member states (“ECOFIN”): they enthusiastically embraced the VAT Action Plan that the EU Commission came up with recently (see http://www.us-vat.com/blog/?p=1184).
They have a couple of comments that aim to accelerate the process, which makes sense given that the focus of the VAT Action Plan is on minimizing the “VAT gap” (see http://www.us-vat.com/blog/?p=1065 and http://www.us-vat.com/blog/?p=897). The faster these proposals get implemented, the more VAT revenue flows in the ministers’ coffers!
Preparing for the planned VAT implementation in Puerto Rico has been a total nightmare for businesses. Many IT departments are currently trying to make sense of the Day 1 requirements, which is assumed to be June 1, i.e. next week.
In the meantime, the PR House and Senate has passed legislation that stops the entire idea of a VAT in PR. Currently, the wait is for the governor to veto. But even if the would do that, there is a procedure for Congress to override the governor’s veto.
But as long as the governor has not signed the legislation that abolishes VAT, we must assume that VAT will happen.
Difficult position to be in, but I’m not ready to advise my clients to call it off…
Sovos published a list of recent changes in VAT compliance rules in the European Union – have a look here: http://sovos.com/blog/recent-vat-compliance-updates-may-2016/.
Like The VAT Blog, Sovos has a free subscription service, that automatically sends an email at the time of a new publication. You can sign up for Sovos’ emails through the above link.
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Puerto Rico is on the brink of NOT introducing a VAT on June 1. The PR parliament has overwhelmingly voted in favor of a proposal to abolish the plans to introduce a VAT, and to stick to the existing Sales and Use Tax system.
However, the governor may veto this proposal.
Our friend Carlos Serrano (email@example.com) writes:
“At this time, certainty on the tax consequences of commercial transactions for June 1, 2016 and thereafter is unattainable. The bill, as approved, will hopefully make its way quickly to La Fortaleza to either become law or be vetoed and in the eventuality of the latter, the outcome will continue to be uncertain until a potentially unprecedented vote at both the House and Senate. If anything can be assured, it is that there will not be a dull moment in the long running saga of Puerto Rico’s attempt at a comprehensive tax reform.”
See Carlos’ entire message here:
All done with prepping my 3 VAT sessions in two days – I am on my way to New Orleans for “CRUSH” – Avalara’s first tax conference.
I am looking forward to meeting many new and surely a bunch of old friends! Back in NYC late Thursday.
Please drop me an email (firstname.lastname@example.org) if you want to receive a pdf copy of the slides.
Cafe Du Monde, New Orleans, 2014
Just to post a quick PSA that the European Commission has a free online EU VAT course on their website. This course provides you with the fundamentals of the EU VAT Directive.
It covers the typical “VAT 101” type topics that you will see and hear in my one-hour VAT training sessions, but then in more detail, and with more legal references and case law. There are 12 modules of 20-50 mins each.
Yes, it is entirely EU-centric, but that is not a bad thing as this course will give you a head start on studying other VAT systems, as the basic rules are pretty much the same across the globe.