On April 16, 2015, Constitutional Amendment No. 87 was enacted amending the State Value-added taxation system for purchases made by non-taxpayers. The new rule gradually changes the taxation from an origin-based model to a destination-based model.

Pursuant to the Federal Constitution before the amendment, where the buyer was not a Value-added tax taxpayer, the relevant taxpayer had to pay Value-added tax in full solely to the State in which the establishment of the seller was located. As a consequence, the State in which the buyer was located or the State of the destination of the goods did not receive any portion of the tax.

According to such system, before the amendment the Federal Constitution provided that on sales to a non-taxpayer located in another State the tax rate was (i) the interstate rate, where the buyer was a taxpayer, in this case the State of destination was entitled to the amount derived from the difference between the internal tax rate and interstate tax rate or (ii) the internal rate, where the buyer was a non-taxpayer, and the State of Origin was entitle to the tax.

Pursuant to new rules, the interstate rate will apply even where the buyer is a non-taxpayer and the amount of tax resulting from the difference between the Value-added tax rate at the destination and the interstate rate is due entirely to the State of the buyer until 2019. However, the aforementioned change will take place gradually as follows:

  1. 20% for the state of destination and 80% for the state of origin in 2015;
  2. 40% for the state of destination and 60% for the state of origin in 2016;
  3. 60% for the state of destination and 40% for the state of origin in 2017;
  4. 80% for the state of destination and 20% for the state of origin in 2018.
  5. 100% for the state of destination in 2019.

We emphasize, however, that the above mentioned amendment will only come into effect on January 1st, 2016.