6 March 2015

The Sales and Use Tax in Puerto Rico is to be replaced with a VAT system, and the rate will be 16% from 1 April 2015 – up from the current 7%. The full VAT regime will be implemented later, but the current Sales and Use Tax is to be gradually transitioned into VAT with the right for certain businesses to recover input tax.
 
The introduction of VAT is part of a package which shifts the tax burden from direct to indirect taxation – a trend which is finding favour in many countries worldwide as they compete to attract business to their jurisdictions using low corporate tax rates and personal income tax rates.