Indirect Tax News - February 2020

Main changes related to the Canary Islands Indirect Tax

On 19 December 2019 the Parliament of the Canary Islands passed a law regarding the Canary Islands’ budget for 2020. The law was published in the Official Gazette of the Canary Islands on 31 December and it entered into force 1 January 2020.

The law includes several modifications regarding the Canary Islands Indirect TA (IGIC) rates. The main changes are as follows:

  • The general IGIC rate went up from 6.5% to 7%.
  • The higher IGIC rate applicable to certain products (such as shotguns, jewellery, perfumes) went up from 13.5% to 15%.
  • The IGIC rate applicable to telecommunications services went up from 3% to 7%.
  • The IGIC rate for the supply of energy went up from 0% to 3%, except for energy consumed by homes – that rate remains at 0%.

The law also modified the application of the 0% IGIC rate with respect to supplies and imports of goods.

The requirement to apply the 0% IGIC rate to residential construction work changed with respect to services supplied and construction work done on social housing. The requirements for the application of the reduced 3% and 5% IGIC rate for housing acquisitions by specific groups was also modified.

Finally, the law has also updated the sales equalization tax for those entrepreneurs that are covered by this special regime (mainly those in the retail trade sector) to the new 7% and 15% IGIC rates, being the rates for sales equalization tax 0.7% and 1.5% respectively.

Rosario Estella

Álvaro Gómez-Elvira