Decree 1747, published in the Official Gazette of 25 March 1997, exempts from VAT the importation and purchase of qualifying capital assets and services by enterprises engaged in industrial projects during their pre-operational stage. For this purpose, industrial projects are those involving:
- the conversion of natural products, including extraction, farming or manufacturing; or
- a process that results in a physical, mechanical or chemical transformation of raw materials or semi-finished products.
The pre-operational state is deemed to cover the period from the date of investment, assembly or actual operation of the project and the start of production activities for commercial purposes. Special rules apply, however, to industrial projects in the oil and mining sector.
The VAT exemption applies for a 5-year period (which may be extended) subject to several conditions. For example:
- the industrial project must concentrate on export activities or the generation of foreign currency; and
- the taxpayer must file an application for the exemption according to the established procedure.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Deirdre Silberstein, Washington, on +1 202 955 4000 or enter a text search "Deloitte & Touche" and "Business Monitor".
