Sales and Use Tax (“SUT”) is applied, collected, and remitted to the government of Puerto Rico on all sales of taxable items. Taxable items include tangible personal property, taxable services, combined (property and service) transactions, and admission sales. Taxable items exclude services to Homeowners Associations (“HOAs”), HOA and certain membership fees, educational services including admission, certain fees by financial institutions, insurance services and commissions, medical and hospital services, prescription medicines, raw materials acquired in manufacturing operations, and food and ingredients for food (except when prepared or processed).

Generally, the SUT rate on sales of taxable property is 11.5% (10.5% is remitted to the Puerto Rico Treasury and 1% to the Municipality). Taxable services are subject to 4% SUT (remitted to the Puerto Rico Treasury only). Certain taxable services are subject to 11.5% SUT. Combined sales are subject to the rate applicable to the primary product or service purchased. In addition, effective October 1, 2019, any merchant who meets the eligibility requirements established in Administrative Determination 19-03 may receive a certificate that qualifies the business to charge an SUT of 7% on sales of prepared food.

Tangible personal property sales are sourced at the location of transfer of ownership of property or address on file obtained in good faith. Taxable services are sourced at the location where services are rendered, except in telecommunications, cable and satellite television, tangible personal property rent, and bank fees, respectively sourced to the location of the customer, tenant, and financial institution. The municipal tax rate for taxable services depends on the municipality from which the invoice is sent. These rules only apply to SUT.

A registered merchant is relieved of the requisite to pay SUT on taxable property once it has obtained an Exemption Certificate. A registered merchant is relieved of the requisite to collect and deposit SUT if it possesses an Eligible Reseller Certificate in accordance with Section 4030.02.

Any person who introduces personal property any means, including a postal service system or air carrier, subject to use tax, must file a Monthly Tax Return on Imports no later than the twentieth (20th) day of the month following the transaction occurred of the tax. The Filing of the Monthly Tax Return on Imports will not be a prerequisite for the release of imported tangible personal property. This return includes the portion of the municipal use tax collected pursuant to Section 6080.14 of the Puerto Rico Code for tangible personal property introduced to Puerto Rico. An additional return will not have to be submitted for the purposes of the Municipal Sales and Use Tax.

Every qualified merchant must submit a Monthly Sales Tax Return and Use no later than the twentieth (20th) day of the month following the one in which such taxes are collected.