United States

Views on VAT: Puerto Rico Update

Tuesday March 22, 2016 2:00 PM - 3:00 PM EDT
From KPMG TaxWatch

KPMG TaxWatch


Event Overview

KPMG LLP invites you to join us for a discussion on the latest developments regarding the introduction of a value-added tax (VAT) in Puerto Rico, now scheduled to be effective beginning June 1, 2016, including an analysis of draft regulations.

What are the changes?

Last year, the Commonwealth of Puerto Rico enacted comprehensive tax reform to replace the 10.5 percent and 4 percent Commonwealth sales and use tax (“IVU” under its Spanish acronym) with a 10.5 percent VAT. On March 7, 2016, the Secretary of Treasury of Puerto Rico announced that the implementation of the  VAT, originally scheduled for April 1, 2016, is delayed for 60 days in order to provide additional time for taxpayers to prepare for changes.

Our Puerto Rican and Global Indirect Tax professionals will provide updates on the current status of the VAT implementation following the March 7 announcement and discuss the draft VAT regulations that were issued on February 19, 2016 in order to allow affected businesses to prepare for the new VAT.

Who will be impacted by the changes?

All businesses with activities in Puerto Rico as the Commonwealth will undergo a fundamental shift in its consumption tax system – from a sales and use tax to a value added tax. The move to a VAT will thus impact most sales of goods and services within Puerto Rico, modify the eligibility for exemptions and consumption tax reliefs, create a right for businesses to claim a credit for VAT paid on their expenditures, and impose new compliance requirements.

Additional Resource

Please click here to access the Puerto Rico: Transition from IVU to VAT slip sheet.

Leah Durner

Principal, Washington National Tax, KPMG LLP

Carlos Molina

Tax Partner, KPMG LLP

Jeremy Gray

Senior Manager, Indirect Tax, KPMG LLP

Philippe Stephanny

Senior Manager, Washington National Tax, KPMG LLP