Legal Alert – VAT on Services – Modifications to the Sales and Services Tax Law

With the enactment of Lex 21.420, last February 4th,  the Sales and Services Tax Law that affects professional services, in general, have been modified, resulting in the loss of their non-taxable status.

Although VAT taxation of these services will come into effect on January 1st, 2023, its imposition will affect individuals or legal entities that provide services to clients whose activities are not taxed and therefore cannot take advantage of the credit produced. Furthermore, this taxation will increase the cost of services and eventually cause a loss of competitive advantages over other individuals or entities that may be exempted from this taxation due to their legal configuration or personal capacity.

In light of this situation, it´s essential to analyze the nature of the service they provide and verify whether they will be subject to the tax as mentioned above. Our team is at your disposal to assist you in determining the possible impact of this modification on your business and to seek alternatives to mitigate such effects.

If you wish, we can schedule a conference call to clarify any doubts you may have on the subject.

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