Tax Development Apr 01, 2015
On February 11, 2015, House Bill 2329 was introduced to radically change the tax code of Puerto Rico. The bill is designed to scrap the current tax code and replace it. In effect, the legislation is designed to institute a value-added tax (“IVT”) system, lower income tax rates, and change capital gain and dividend rates.
The legislation is currently being debated in a number of forums in Puerto Rico. The reform is hotly contested on a number of fronts, including the media, and may not pass. However, there is some discussion among the political parties of a compromise that may be acceptable to a majority of the Legislature.
The changes are far-reaching and still under debate. The most important short-term effect is that, if the bill had passed prior to April 1st, the current legislation would have increased the sales tax rate from 7% to 16% beginning April 1st. Based on the level of debate on the matter, we do not estimate an implementation date prior to May 1st, if then. This increase is designed to eliminate any changes in purchasing patterns over the short term. A full value-added tax system is expected to take effect beginning January 1, 2016.
Ryan will keep you apprised of any developments on House Bill 2329 as they occur. A full review of House Bill 2329 is forthcoming. If you would like a copy of House Bill 2329 or would like information regarding House Bill 2329, please contact the Ryan tax professional below.
TECHNICAL INFORMATION CONTACT:
Dave Naney
Principal
Ryan
954.740.6240
dave.naney@ryan.com