Puerto Rico sales tax guide – Lovat Compliance

Standard rate

Sales and use tax: 11.5% on most goods and services. 10.5% on goods and services not subject to municipal SUT (sales and use tax).

Reduce rate

Groceries – 1%.

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Zero rate

Prescription Drugs;
School supplies acquired during the back-to-school tax-free holiday;
Supplies used to render health services by hospital facilities;
Supplies are acquired by government agencies.

To claim this exemption, the merchant has to request the Certificate of Exemption from the Secretary of the Treasury.

Threshold

Puerto Rico, following 45 American states, established that businesses with a nexus are required to register with the Ministry of Finance of Puerto Rico, as well as collect and transfer sales tax to Puerto Rico.

By 2021, if your total gross sales, in Puerto Rico are over one hundred thousand dollars ($100,000) or carry out at least 200 transactions during your accounting year, then you have an economic nexus.

Registration procedure

To register online, visit Puerto Rico’s Sistem Uificado De Rentas Internas (SURI) website and send the application.

Information to be provided in the Trader Registration Certificate Application:

The legal name of the applicant (corporation, partnership, individual owner, or other);
Social security number or employer identification number, if applicable;
Postal address;
Physical address;
Telephone number;
Email address;
Type of organization;
Date of registration;
The closing date of the reporting period;
Turnover;
Description of the activity;
Code according to the North American industry classification system.

The list can be expanded.

Tax representative

Not required.

SUT returns filing and SUT payment date

It is necessary to file a declaration and pay tax no later than the 20th day of the month following the reporting period. The reporting period is a month.

This return, and the corresponding payment, can only be filed electronically through SURI.

Penalty

The penalty for not complying with Puerto Rico’s Notice and Reporting Requirements is $100 for each transaction. Failure to file a quarterly report is $5,000 for each failure. And failure to file the annual report is $500 for each failure.

Keeping records

Merchants subject to the Act must keep the following for no less than six years:

Accounting records;
Papers;
Documents;
Invoices;
Commercial receipts;
Canceled checks;
Payment receipts;
Certificates of exemptions;
Shipping documents;
Evidence of the taxable items received, used, and sold;
Collection records;
Any other evidence related to the sales and the amount of the sales tax withheld and paid to the Secretary of Treasury.

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SUT Standard rate

Sales and use tax: 11.5% on most goods and services.

10.5% on goods and services not subject to municipal SUT (sales and use tax).

Threshold

For remote sellers who do not have a presence in Puerto Rico, there is an economic nexus, above which you must register and pay sales tax. The economic nexus is $100,000 in annual sales or 200 separate sales transactions, whichever your business reaches first.

Pieces of evidence

For the purposes of the sale of specific digital products, the source of income from such sales shall be the physical address of the buyer to whom the sale is made. In the event that the seller does not have the physical address of the buyer, the seller must use the buyer’s postal address as the source of income for the sale. In the event that the seller does not receive any of his/her physical or postal addresses from the buyer, the seller must use the bank account or credit card information of the buyer or the branch of the financial institution where the bank account is registered (that is, where it was domiciled) with which he/she makes the purchase of the specific digital products. In the event that the bank account cannot be attributed to a specific branch or location, the source of the charges will be the main office of the financial institution.

The source of income from the payment generated in the sales of specific digital products shall be determined in accordance with the provisions of this paragraph, regardless of the physical location of any server from which the specific digital product is reproduced or downloaded or any other factor related to the sale thereof.

E-services list

Digital Products – electronically transferred audio, visual, audio-visual products, or other digital products, provided that a digital code grants a buyer the right to obtain the product will be treated the same way as a specific digital product.

Digital audiovisual work means a series of related images that, when displayed in succession, convey an impression of movement, along with the sounds accompanying it, if any;
Digital audio work means a product that results from the fixation of a series of musical, spoken, or other sounds, including a ringtone;
The English term “Ringtone” means a digitized sound file that is downloaded to a device and can be used to alert the buyer to a communication;
Digital Codes – a code that comes packaged with a physical product eligible for movies accessible anywhere, such as a DVD or Blu-ray. Buyers can redeem digital movie codes anywhere for a digital version of the movie, which can add movies to their collection and be accessible anywhere;
The term “Electronically Transferred” means that the customer obtained it by means other than tangible means of storage;
Other Digital Products may include greeting cards, images, video or electronic games or entertainment, and electronic group memberships to obtain exclusive electronic or audiovisual data, including but not limited to theatrical performance, music, concerts or videos, adult audio-visual content material, news or information products, digital storage products, computer software applications, and any other products that may be considered a digital product.

Registration procedure

You can register through the «Suri» – a unified internal revenue system. To do this, you must provide personal and contact information, as well as information about the company.

Keeping records

The invoices shall be kept for no less than 6 years.

SUT returns filing and SUT payment date

It is necessary to file a declaration and pay tax no later than the 20th day of the month following the reporting period. The reporting period is a month.