Increase in the rate of the sales and use tax (IVU) in Puerto Rico, from 6% to 10.5%, effective July 1, 2015. Because municipalities in Puerto Rico also levy IVU at a rate of 1%, the total IVU rate is scheduled to increase from 7% to 11.5%.
The legislation (Act No. 72) providing for the rate increase provides that contracts entered into prior to July 1, 2015, are exempt from the IVU rate increase for a period of 12 months or for the term of the contract (whichever is shorter). Also, the acquisition of tangible personal property and services under construction projects that began prior to May 30, 2015, are also exempt from this rate increase.
The Secretary of Puerto Rico’s Treasury has issued a several guidance items—Tax Policy Circular Letter Nos. 15-09, 15-10, and 15-11—as guidelines on the IVU rate increase. Specifically, the three circulars provide detailed guidance on these transition rules.
Read a June 2015 report [PDF 52 KB] prepared by KPMG LLP: Puerto Rico publishes detailed transition rules regarding the increase of sales tax effective July 1, 2015
© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.