Puerto Rico: Sales tax increase on July 1

Puerto Rico: Sales tax increase effective July 1

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%.

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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

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