Tourist services will not have to pay the 4% of Value Added Tax (VAT), after the approval in the second legislative debate of bill 21,934. Once it becomes effective, tax collection will be suspended until June 30, 2021. This means a temporary halt on the payment of VAT in this sector.

Due to the serious affectation of tourism by the Pandemic, the legislators considered it convenient to give a breathing space for its economic reactivation. Thus, VAT in tourism will be taxed in stages as follows:

4% as of July 1, 2021

8% as of July 1, 2022

13% as of July 1, 2023

“These initiatives have emerged from the Legislative Assembly in the absence of a comprehensive plan from the National Government on how to deal with this situation, and the truth is that we missed a clear route by the Government to be able to reactivate not only this sector but most of the other economic sectors”, said Roberto Thompson, deputy proposer of the bill.

“I hope that this debate will serve to demand once again from the Government of the Republic, a reactivation route that contemplates a sustained effort so that all the sectors that have been so severely affected, such as in this case, the tourism sector, actually succeed,” the deputy added.

The suspension of VAT will take effect only after the Executive Branch completes the process to convert the text into the Law of the Republic. According to data provided in the bill, tourism generates 600,000 jobs directly and indirectly in the country. For 2019 the sector produced a foreign exchange of more than $ 4,000 million. Additionally, the deputies vote this week on the project that also aims to suspend the collection of VAT for construction services

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