Beginning July 1, 2015, the current IVU rate of 7% will increase to 11.5% (this rate consisting of a commonwealth tax rate of 10.5% and a municipal tax rate of 1%). For periods after June 30, 2015, merchants with a “reseller certificate” may claim a credit equal to 100% of the amount of IVU paid on inventory against the amount of IVU collected on their sales.
Effective October 1, 2015, business-to-business services that are currently subject to IVU will be subject to tax at the 11.5% rate. Business-to-business services and designated professional services, such as those rendered by accountants, lawyers, and engineers, that are not currently subject to IVU will be subject to IVU at a rate of 4% (but not subject to a municipal IVU).
Effective April 1, 2016, or following any extended sunset date of the IVU, the IVU will expire and will be replaced by a new value added tax (VAT) system. VAT at a rate of 10.5% will apply to the introduction into Puerto Rico of taxable articles and to taxable transactions, including a merchant’s sale into Puerto Rico of goods and services, a non-resident’s rendering of a service to a person in Puerto Rico, and other combined transactions. The municipal IVU of 1% will remain in effect.
Read a June 2015 report [PDF 57 KB] prepared by KPMG LLP: Puerto Rico comprehensive tax reform enacted
© 2016 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.