These are the products that will no longer pay VAT, according to the draft Law for Economic Development. Not all diapers will have a zero fee

The changes made by the Executive to its tax reform proposal leave more products on the list of what will not pay the 12% value added tax (VAT) if approved and effective.

The original government project, called Opportunity Creation, which was not qualified by the National Assembly, included several items with zero tariffs and took others out of that benefit. While in the new Law for Economic Development, delivered this Thursday, October 28, the idea of ​​not taxing the products announced from the beginning is maintained and those that were thought to be taxed now are less. The first plan contained seven removals from the zero fee list and now only three are removed.

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What is left out are diapers in general, since the new bill specifies that the zero rate will be for “popular disposable diapers.” What are those kinds of diapers? This will be defined in the regulations issued for this law, once it is approved.

The text that the National Assembly must now process in thirty days, since it is an urgent economic project, includes reforms to the Internal Tax Regime Law, one of them is article 55 that lists goods with a zero VAT rate and These are the ones that the Executive includes:

• Glucometers, lancets, test strips for glucose measurement, insulin pumps, pacemakers, masks, oximeters, alcohol and antibacterial gel higher than 70% concentration.
• Newsprint is added to bond paper and books.
• Sanitary towels, tampons, menstrual cups and popular disposable diapers, according to the definition established in the regulations of this law.
• The importation of fuels derived from hydrocarbons, biofuels, their mixtures including LPG and natural gas, destined for domestic consumption in the country, carried out by taxpayers who have the permits issued by the respective Ministry.
• The services provided by tourist accommodation establishments to foreign tourists. These businesses must be registered and have an operating license, and foreigners who legally enter the country for less than 90 days are considered as tourists.
• Hybrid and electric vehicles for private use and solar panels will continue with a zero rate. In the first bill sent by the Executive, it was intended to apply 12% VAT to them, but the Government backed down as it was not compatible with the support measures with the environment.

This reform implies that for the consumer there will be savings in these purchases. For example, each mask will cost about three cents less. This biosecurity implement is used daily and several times, according to the time the person remains away from home. For example, Julio buys four boxes of 10 units each month each month and pays $ 11.20 for them: $ 10 for the product and $ 1.20 for VAT.

In the case of sanitary napkins, prices vary due to the types and units that come in each package or combos that are usually made by manufacturing companies. There are presentations for which you pay $ 2.85 plus 34 cents for VAT, and packages that cost $ 8.26 in which the VAT represents 99 cents of surcharge.

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Diapers in packages of 100 units cost around $ 14 and with VAT it is $ 1.80 more, but it is not defined which are the popular diapers that will no longer pay that 12%.

The Ministry of Economy and Finance estimates that due to the reforms to this tax, VAT collection will be lower by about $ 34 million.

On the other hand, the project eliminates from the list of exemptions, that is, they will be taxed at 12%, other products such as:

• LED lamps (numeral 12 of article 55 of the Internal Tax Regime Law).
• Electric cookers for domestic use and those that work exclusively by induction electric mechanisms, including those with an electric oven, as well as pots for domestic use, designed for use in induction cookers and electric water heating systems for domestic use. , including electric showers (number 17).
• Those that are entered into the country by the administrators and operators of Special Economic Development Zones (ZEDE), provided that the imported goods are destined exclusively to the authorized zone, or incorporated in any of the production transformation processes developed there (literal e of the numeral 9).

VAT is the tax with the highest collection for the State. In 2020 it meant $ 5,506 million in revenue. Over time it has had several changes.

The original VAT rate was set at 10% in 1990 and was increased to 12% on November 18, 1999. Later, on May 20, 2016, the rate was raised to 14% for one year, arguing that support the reconstruction of the areas affected by the earthquake of April 16 of that year. At present it is 12% and it will remain that way, as the president assured that he will not raise it. (I)