Puerto Rico Tax Requirement Change Update

2014-08-13

As a result of the amendments to the PR Internal Revenue Code of 2011 brought by Act 80 of July 1, 2014, every importer will have additional filing requirements related to Sales and Use Taxes (SUT). Specifically, every taxable item introduced into Puerto Rico, either by sea, air or mail, will be subject to SUT. In addition, every importer should pay the SUT on the items brought by sea before taking possession of such items.

The New Tax Rule was to be in effect starting on August 1st, 2014, however, due to systems issues, the implementation will be effective on a date to be announced by the Puerto Rico Tax Department. Once this new tax rule becomes effective, there will be several additional filing requirements that will need to be done with regards to importations. The following is a brief description of each item.

· Declaration of Goods Imported: The importer should file a declaration of goods imported and pay the corresponding Use Tax before taking possession of the imported goods. In the case of Bonded Importers, the tax is not paid with this declaration and is postponed until the filing of the Use Tax Return the 10th of the month following the declaration.

· Use Tax Return: The importer should file a monthly Use Tax Return on imports on or before the 10th day of the following month. Since these changes are effective for August 2014, the first of these returns is due on September 10, 2014 for the August 2014 period.

· Sales and Use Tax return: The importer, as well as any other merchant doing business in PR, has to file a monthly Sales and Use Tax Return on or before the 20th day of the following month (i.e. for August 2014, this return is due on September 20, 2014. Please be aware that the July 2014 return is still due on August 10). It is important to mention that, starting with the August SUT return, the taxpayer will have to file only one tax return with the Puerto Rico Treasury Department (PRTD) regardless of the amount of locations it currently has. However, the PRTD will no longer handle any SUT of any municipality. Therefore, the municipal tax should be filed and paid directly with the municipality. In this return, every merchant that has a valid Reseller Certificate will be able to take as a credit, subject to certain limitations, the Use Tax paid on items purchased to be resold. If the merchant does not have a Reseller Certificate, this credit will not be available.

All of these returns/declarations should be filed through a new system that the Puerto Rico Treasury Department called PICO (Portal Integrado del Comerciante). Every merchant should register with PICO as, starting with the August tax return, the same should be filed through this system (The July tax return, which is due on August 10, should be filed in the same manner that the merchant has been filing its prior tax returns). To register with PICO, please use the following link https://comerciantes.hacienda.pr.gov.

Becoming a Bonded Importer

Every importer that wants to be a bonded importer should file a request to the Director of the Sales and Use Tax Bureau to the following address:

Sales and Use Tax Bureau
Department of the Treasury
Mercantil Plaza Building
Ponce de Leon Avenue
Parada 27 ½
San Juan, PR 00918

The request should indicate the nature of the business and the amount of the bond it desires to establish, which should not be less than $10,000. The bond should cover the amount of the tax plus  25% of such amount. The taxpayer may request at any moment to change the bond amount. However, this amount will never be less than $10,000.

In addition, the taxpayer should be up to date with the filing of its income tax returns and its SUT returns and should not have any tax debt with the PRTD. In such cases where the taxpayer has a debt with the PRTD, the taxpayer could become a Bonded Importer if it shows that it has established a payment plan with the PRTD and is up to date with it.

Once this request is filed, the PRTD will assess the request and complete the Form SC 2058 – Fianza para Garantizar el Pago de Impuestos, Multas, Intereses y Penalidades. This form should be signed by the the insurance company and then returned to the PRTD.

Once the taxpayer becomes a Bonded Importer, it can defer the payment of the Use Tax to the 10th day of the month following the date in which the goods were imported to Puerto Rico. However, if the Use Tax related to the imported goods exceeds the Bond amount, the bonded importer will have to pay the Use Tax before it can take possession of the goods.

We recommend that you consult with your tax advisor to be sure you comply with these new requirements.

Should you want us, Crowley Caribbean Logistics LLC to help you with the filing of the Declarations of goods imported, we will be glad to assist you. Please call us at 787-793-8575 to discuss in which manner we can serve you better.