The Public Services Regulatory Authority (ARESP) clarified what public services will be taxed and those that are exempt, since on July 1st, from the collection of the Value Added Tax (VAT).
This was reported by the entity through a statement, which discloses what services should be charged and transfer to the Ministry of Finance, the governing body that will be responsible for collecting the taxes established by the Law of Strengthening Public Finance (9635) .
ARESEP will not include in the calculation of rates, the increase in the cost of inputs that have been recognized and accredited in the tax assessment process defined by law 9635, in order to avoid a double tax payment,”
is detailed in the notice.
ARESEP currently regulates 32 public services, which could be in one of these scenarios of recognition of taxes paid when acquiring the necessary supplies to provide the services:
No VAT: bus fares, taxi, train, cabotage regulated by the regulatory entity, which will be exempt from VAT in the final price, according to law 9635.
However, some goods or services used by operators will be taxed with VAT and, due to the exemption from the final price, Law 9635 provides that the VAT paid on these inputs can not be requested as a tax credit, therefore, if you have information on the final cost of these inputs, they will be included in the tariff,”
they added.
Partial exemption from VAT: this is the case of electricity and drinking water service. According to law 9635, the monthly consumption of water less than 30 m 3 and electricity less than 280 kWh are exempt from VAT, while the consumption above these levels will pay VAT for the total consumed.
Also, the regulatory institution noted that
the bill for consumption below these limits could also be affected by the impact of the inputs taxed with VAT , which companies require to provide the service and for which tax credits may not be requested.”
Additionally, it was indicated that the Ministry of Finance will collect the tax on the final amount charged in the invoice to the associates.
VAT: It will be reflected in the receipt of services such as electricity generation or sewerage. This will be handled internally by the companies, transfers the proceeds to the Treasury in the final price and the tax can be charged for the inputs used in the provision of the service, so the rates for this item will not be increased.
In the case of gasoline, Law 9635 establishes that
its sale, on which the single fuel tax applies, as well as the necessary inputs for its preparation, are not subject to VAT.”