Amendments to VAT Law
Sale of immovable property
- Habitual sales: the concept of habitual seller of immovable property is specified and parameters are introduced for its qualification by the IRS.
- Presumption of habitual character: the presumption of the habitual character of the seller in case of a sale or lease before 1 year has elapsed from the acquisition of the property is eliminated.
- Taxable base: the commercial value of the land will be deducted from the taxable sale price, eliminating the option to deduct its fiscal valuation.
- Provisional VAT credit: applicable to immovable property sellers that cannot use the total VAT credit. In this case, the VAT debit must be adjusted later when performing activities exempted or not subject to VAT.
Lease of immovable property
- Description of the activity subject to VAT: parameters and guidelines are introduced for determining whether a property has movable assets, equipment or machinery to perform industrial or commercial activities or not.
- Exemption: VAT exemption for hotels is extended to taxpayers that lease furnished properties to foreign tourists.
Benefits and exemptions
- Donation of goods that cannot be sold: not subject to VAT when donated to non-profit institutions.
- Exemption for imports of capital assets: the procedure and requirements for applying to this exemption are simplified, reducing from 12 to 2 months the period of income generation, eliminating the “foreign investor certificate” requirement, and specifying the opportunity to apply for the exemption.
- Health benefits: VAT exemption for mandatory health benefits financed by public and private medical insurance companies.
- Exempt entities: the list of exempt entities is updated.
Change of VAT taxpayer in credit card transactions and imports
- Credit card operators and imports: The IRS will be entitled to determine that credit card operators must withhold the VAT in certain cases, as well as to change the VAT taxpayer in case of habitual imports performed by subjects not registered as VAT taxpayers.
- Proportionality: proportional rules applicable to VAT credits are clarified and will only apply for taxpayers who perform both activities that are exempt and subject to VAT, excluding activities that are not subject to VAT.
- False or unreliable invoices: Upon the request of the IRS, taxpayers must provide background information evidencing the origin of the VAT credit.
- VAT in Construction: additional requirements are introduced to determine VAT credits for construction companies that recover VAT under article 21 of the Decree Law No. 910 of 1975.
VAT recovery and refund
- Fixed assets VAT recovery (27 bis): The legal term for maintaining a VAT Credit balance is reduced from 6 to 2 consecutive tax periods. The possibility filing refund requests upon milestones in construction agreements is expressly recognized. VAT recovery request will be subject to a new general VAT refund procedure.
- VAT recovery in case insolvency/bankruptcy procedures: the refund of VAT charged in invoices issued to debtors in an insolvency agreement is regulated, subject to a new general VAT refund procedure.
- VAT recovery for exporters: a new general VAT refund procedure will apply.
- New single procedure for refunds of VAT credits.
Registries and tax documents
- Tax receipts and transport documents: documents must be issued electronically and separately specify the VAT charged.
- Purchases and Sales Ledger: must be kept electronically, eliminating the obligation to have a physical registry. Small taxpayers will be exempt from keeping this ledger.
- New simplified VAT regime for small taxpayers, based on a presumed taxable base.
- Requirements to postpone in up to two months the VAT payment for small taxpayers are amended.
VAT benefit for affordable housing: the benefit of deducting the VAT credit applies for houses from UF 2.000 (approx. USD 83,000) up to UF 4.000 (approx. USD 166,000), in amount equal to a 45% of such VAT.