As of August 31st, 2021, construction projects will begin to collect VAT, after the exemption was approved in the second legislative debate in the past week. This includes all engineering, architecture, topography and civil works construction services, and other projects registered and/or endorsed by the College of Engineers and Architects between October 1, 2019, and July 30th of this year.
Before its approval, in mid-August, modifications were made to establish that the gradual collection is as follows:
Publication in La Gaceta-August 31, 2021: Exonerated
September 1, 2021 – August 31, 2022: VAT 4%
September 1, 2022 – August 31, 2023: VAT 8%
September 1, 2023-onwards: VAT 13%
Chamber of Construction celebrates the decision
There is no longer any danger that construction will become 9% more expensive in the short term, thanks to the project approved by the legislative assembly. And it is that the new law will allow the application of the value-added tax (VAT) to be carried out in a staggered or gradual manner, starting in July 2021, in the engineering, architecture, topography, and construction of civil works services.
This is a one-year extension
“With this reform, there is no doubt that the spirit of the Law is that the gradual payment of VAT in all architectural, engineering and civil works construction services applies to all construction projects registered or approved in the CFIA. With this, the deputies generate a stimulus to investment in new works, avoiding greater unemployment and promoting greater activity in the sector,” said the Construction Chamber.