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Sales & Use Tax Tips for JULY 2007
Understanding The New Puerto Rico Sales Tax
Although the recently enacted Sales and Use Tax law in Puerto Rico is more than eight months old, there is still a lot of uncertainty as to how companies should proceed. Ninety percent of U.S. companies that sell nationwide also sell in
Puerto Rico.
Though not widely publicized, each of these businesses is affected by the new Puerto Rico Sales Tax laws. Left unaddressed, a company can unknowingly accumulate a huge sales tax exposure.
Currently the central government's tax rate of 5.5% is imposed on the sale of tangible personal property. The municipalities are also allowed to impose a Sales & Use Tax at the rate of 1.5%. Local Sales Tax rates and registration
requirements can vary. Some local taxes are administered by the central government and some are handled by the municipalities directly. In addition, nexus has been given a broad definition. If your company is making sales into Puerto Rico, their tax department will likely consider your business to
have a filing requirement.
Unlike the majority rule in the continental U.S., the new Sales Tax is also imposed on services, unless specifically exempted.
Another key difference from general stateside law is that a return must be filed for each store location instead of for each entity.
The new laws in Puerto Rico are no less ambiguous than the ones stateside. Companies may thus benefit from the assistance of Sales & Use Tax Specialists.
If you're doing business in Puerto Rico, we recommend understanding and proactively managing these new requirements.
* This tip is intended to provide general information only and is not to be considered as a substitute for professional advice.
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Associates Sales and Use Tax professional for a no-obligation consultation about your Sales & Use Tax issues.
