The uncertainty caused by the tax reform, specifically the new VAT regime, resulted in a significant drop in the construction sector. According to the Central Bank, the drop to May was 14.2%, the most serious since September 2017.
The VAT regulations explain that the real estate development projects and their associated services will be exempt from taxes until July 2020, later they will pay 4%, then 8% and in 2022 13%.
Meanwhile, projects must register with the Exonet platform to request exemption.
According to the Treasury, in the first week of implementation of the tax, about 140 thousand permits of this type were processed.
Construction decreased 14.2%, due to a decrease in residential and commercial buildings, mainly as a result of the uncertainty generated by the entry into force of the tax reform; in the case of construction with a public destination, it was due to a lower execution than that envisaged in road infrastructure and aqueduct and sewerage projects,”
explained the Central Bank.