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Bill introduced to exempt sales tax on items acquired with FEMA funds

By on February 2, 2018

SAN JUAN — Puerto Rico House Municipal Affairs Committee Chairman José González announced Friday legislation to exempt all goods and services acquired through Federal Emergency Management Agency (FEMA) funds from the Puerto Rico sales & use tax (IVU by its Spanish acronym) to help taxpayers affected by Hurricane Maria.

“Puerto Ricans need an opportunity to overcome the worst natural catastrophe in our modern history. After evaluating a series of initiatives, we decided to introduce House Bill 1397, which would amend Section 4010.10 of Act 1-2011, known as the Internal Revenue Code for a New Puerto Rico, to establish a total [sales tax] exemption on the purchase of products and services with FEMA funds,” González said.

“This is a great relief for our people. If approved, [residents] will be able to purchase furniture, appliances and construction materials with their recovery [funds] without having to pay taxes,” he added.

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The lawmaker explained that the 11.5 percent IVU diminishes the purchasing power of people who use FEMA funds to buy essential items related to their recovery from the hurricane.

“When a disaster arises, infrastructure, drinking water, electricity and telecommunications are affected. Citizens face increased expenses…to meet their basic needs, such as buying gasoline or diesel for generators,” González said.

“Therefore, and in the event of a disaster, it is necessary and convenient to exempt taxable items acquired with FEMA funds from the IVU, maximizing the effectiveness of the aid received by the affected citizens and, at the same time, foment the economic activity of our small- and midsize-business owners,” he added.

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