Saturday, January 22, 2022

Houses Passes B-to-B, Value-Added Tax Repeals

By on May 2, 2016

SAN JUAN – Despite the governor’s veto threat, the House passed a substitute bill that would eliminate the value-added tax system and repeal a business-to-business (B-to-B) tax hike to 10.5%.

The higher B-to-B tax is slated to go into effect in June, when the value-added tax (IVA by its Spanish acronym), which is applied to the difference between the seller-purchased price and the resale price, also goes into effect.

It remains to be seen whether the bill, which according to House records was passed in a 45-0 vote, will have support in the upper chamber. Senate Treasury Committee Chairman José Nadal Power said he supports repealing the increase to the B-to-B tax because businesses are not ready for the change. Gov. Alejandro García Padilla threatened to veto the legislation.

The substitute bill, which replaces House Bills 2032, 2838, 2839 and 2840, was approved with an amendment submitted by House Minority Leader Jennifer González that would exclude medical services from the B-to-B amid allegations that the Treasury Department had levied the tax through internal regulations.

The decision to approve the legislation came after lawmakers met with Popular Democratic Party gubernatorial candidate David Bernier, who has insisted on the repeal, saying it would be detrimental to the economy.

House Speaker Jaime Perelló

House Speaker Jaime Perelló

House Speaker Jaime Perelló said earlier in the day that he wanted to approve the bill Monday to allow the Senate enough time to evaluate the measures. He urged the governor to reconsider his decision to veto the bills.

“This is the second time he talks about a veto…. The truth is that the tax reform he wanted, that I wanted, that Tatito [Treasury Committee Chairman Rafael Hernández] wanted, was not approved…. We dealt with certain fiscal issues, but the B-to-B is a matter of economic development. It is more important for me to have economic development than to balance the checkbook every 15th and every 30th,” he said.

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