Presidential Decree No. 2,228 (the "Decree") (Official Gazette No. 40,989 of September 2, 2016) exonerated from VAT liability the sale and import of goods and the provision of services listed below and exonerated from customs fees the import of the goods listed below, made by Governmental offices or State-owned companies, destined to activities related to the administration, design, construction, installation, operation, maintenance, functioning, repowering, modernization, reconstruction, expansion of the systems of massive transport of passengers exclusively by underground, elevated or in level, subway type, trolleybus, and rail track. The Decree entered into force on September 9, 2016 and will remain in force for five years.
The following are the exonerated goods and services:
|Goods||Goods for construction, rolling material (wagons, locomotives, traction vehicles) railways, electrification, control and communications for trains, railroads and vehicles, access control and payment of tickets, equipment for the displacement of users in passenger stations, ventilation systems, air conditioning for fixed installations and rolling material, bombing system, support equipment, security and protection equipment and other necessary goods such as tools, manuals and parts.|
|Services||Studies, designs and fabrication of activities related to the massive transport of passengers, construction, rolling material, railways, fixed installations and mobile equipment, electronic and mechanical systems and equipment for massive transportation.|
The exoneration will apply when the Governmental office or State-owned company requests the exoneration to the Ministry of the People's Power for Transport and Public Works and the latter approves such request in the following terms:
- For imports and sale of mobile goods: Indication that the goods and their amounts correspond with the nature and scope of the activity to develop. It must indicate the specific number of items, the commercial description, the measurement unit, and the amount of goods of the operations are subject to the benefit, in addition to the customs office designated by the applicant through which the imports will be made.
- For the provision of services: the request will indicate the need of the applicable service.
The Legal Department of the Ministry of the People's Power for Transport and Public Works must issue a favorable opinion during the 10 business days after the request is filed and recommend to the Minister the approval or not of the request. The Minister will have 10 business days to approve the request. The Minister must notify the decision to the applicant within 10 business days as of the expiration of the previous period.
The importer may use the approval of the Minister in one or more imports and must file a certified copy before the applicable customs office. The National Integrated Service of Customs and Tax Administration Revenue Service will keep a control of the balance of the imported goods and the goods to be imported in the future, in cases in which imports are made through different shipments. In the case of imports, the exoneration will apply if there is not national production of the imported goods, or if the national production of such good is insufficient, in which case, the Ministry must certify this condition. The importer must file a copy of the certification before the applicable customs office at the moment of the nationalization of the goods.
The beneficiaries of the exoneration must indicate in the invoice and in the purchase order or service agreement the phrase "exonerated operation", as well as the number, date and information of the publication of the Decree and the number of the applicable purchase order of the service. The beneficiaries must file before the Regional Management of National Integrated Service of Customs and Tax Administration Revenue Service, a quarterly relation of the operations that were subject of the exoneration described in this Decree.
The beneficiaries will lose the exoneration if they fail to comply with (i) the biannual evaluation established in article 65 of the VAT Law or (ii) the obligations established in the VAT Law and other tax regulations such as the Organic Law of Customs and its regulations.
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