Treasury Evaluates Repealing 4% B2B tax
The Treasury Department is evaluating the possible repeal of the business-to-business (B2B) tax, Caribbean Business has learned.
Luis Torres Llompart, an accountant and former Chamber of Commerce president, said that Treasury Secretary Raúl Maldonado supports the B2B’s repeal, which has to be done through legislation.
“When will it happen? I don’t know,” Torres Llompart said in response to a Caribbean Business question.
After it came into effect the year before, the 4% B2B tax was slated to go up to 10.5% in June 2016. In an effort by former Popular Democratic Party (PDP) gubernatorial candidate David Bernier to garner votes, lawmakers passed a bill that repealed the proposed hike to the B2B tax. But former Gov. Alejandro García Padilla vetoed the legislation, fueling a showdown with the Legislature.
With the help of minority lawmakers, the majority in both chambers overrode the governor’s veto in May last year, after arguing the hike in the B2B tax was going to be detrimental to the economy and would only raise $25 million per year more.
Torres Llompart also said the repeal of the B2B is one of the topics slated to be discussed at the Manufacturers Association’s Caucus with the government on Feb. 9. Other topics include tax evasion and the simplification of tax processes.
In another attack against tax evasion, the Treasury Department recently shut down a business for failing to pay the sales and use tax. But contrary to his predecessor, Maldonado is open to giving businesses who have failed to pay the sales and use tax, the ability to continue operating while they make payments.
Former Treasury Secretary Juan Zaragoza embargoed 154 businesses for failing to pay the sales and use tax, which caused a hike in the capture of the tax to 68%. Four businesses went out of business as a result and 93, as of December, had filed for bankruptcy.
“The law has to be enforced but most of the businesses who have failed to pay have done so because of the economic situation and not on purpose… The goal should be to allow those businesses to exist but to help them comply with the law, be it through payment plans,” Torres Llompart said.