Reclaiming VAT? What’s that?

One of the hottest topics in international meetings, particularly for organizations in the US that are doing meetings abroad, is the opportunity to reclaim the taxes that are spent on the meeting abroad.

The best comparison I can give is that of Europe and the process of VAT reclamation.  Now, my expertise is not in European meetings, but I have plenty of friends and colleagues who do it and have had multiple discussions with people about the topic of VAT reclamation.  For those unaware of what VAT is, it stands for Value Added Tax which is pretty much, well, taxes.  In many cases, it’s possible to get refunded the VAT for certain services that are paid for abroad… however this may require going through a long tedious process, which for best results generally requires you to hire a company that actually specializes in VAT reclamation, which is usually not 100% of the VAT paid out and also results in having to provide a percentage to that company.  VAT is a complex system and there are many companies that can provide you more insight as to what is and is not reclaimable… just doing a simple search online will yield many results.

In Latin America, VAT is known as IVA (Impuestos al Valor Agregado – the Spanish acronym for VAT), but unlike most of the EU and other parts of the world, there really is no service for IVA reclamation.  Depending on the country, some reclamation options are available for consumer goods purchased if your attendees want to reclaim it at the airport prior to leaving the country.

However, in at least 5 countries there are opportunities to avoid having to pay some of those taxes in the first place:

  • In Mexico, there is the option of the Tasa Cero which is a Zero VAT program for conventions and meetings that are organized by non-Mexican organizations which eliminate the tax on various services, including hotels.  The amount differs depending on the location of the program.
  • In Colombia, you can avoid paying the hotel tax for your group as long as the guests are coming from outside of Colombia – saving you 10% – I once saved a group $25,000 with this.
  • Uruguay offers VAT exemption on event spaces but also on hotel rooms for foreigners during certain seasonal periods (although this could have changed since I was last there)
  • Chile exempts foreigners paying with foreign currency or credit cards from having to pay the 19% IVA on hotel rooms… another significant saving
  • While I do not have personal experience with this, it’s also my understanding that Peru provides exemption on the hotel tax similar to that of Chile

For more information on these exemptions and references, I can gladly direct you to contacts within the tourism offices of each of the destinations mentioned above.

Posted in Awesome Reasons for Meeting in Latin America
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