Puerto Rico VAT 2016 and Sales & Use Tax rise

Wed 25th Feb 2015

The potential January 2016 VAT implementation plans for Puerto Rico have been advanced with the issuance of a bill to withdraw the existing Sales & Use Tax. The bill also provides initial details of the new VAT regime. There is also to be a rise in the SUT rate from 7% to 16% on 1 April 2015.

The following key points are contained within the new consumption tax regime:

  • The new VAT rate will be 16%
  • Imports will be liable to the new VAT; exports will be exempt
  • The supply of taxable goods or services will be subject to VAT
  • The existing SUT rate will rise from 7% to 16% on 1 April 2015 to provide a transition to the new VAT. There will be provision to offset ‘input’ SUT for approved merchants
  • There will be exemptions for the following supplies: oil, petrol and gasoline; financial services and insurance; foodstuffs; public services; electricity; not-for-profit organisations; water; imports of agricultural supplies and motor vehicles; prescription medicines; hotel accommodation; and intangible property
  • VAT Invoices should be issued at the earlier of: cash payment; or within 30 days of the provision of the taxable supply
  • VAT filings will be monthly, and are be due be no later than the 20th of the month following the end of the reporting month. Any VAT due should also be remitted by this date, too. There will also be a facility for the reclaim of any VAT credits.