The Treasury Department of Puerto Rico on August 31, 2015, issued guidance regarding the sales and use tax treatment of designated professional services and business-to-business services.
The guidance—Determinación Administrativa Núm. 15-17 (Spanish)—is effective October 1, 2015.
The governor of Puerto Rico on May 29, 2015, signed Act No. 72 increasing the commonwealth part of the sales and use tax (known in Spanish as Impuesto sobre Ventas y Uso—IVU) from a rate of 6% to 10.5% effective July 1, 2015.
Municipalities in Puerto Rico also levy IVU at a rate of 1%, but that levy remains unchanged. Consequently, the total IVU rate is increasing from 7% to 11.5%.
Act No. 72 further provides that effective October 1, 2015, business-to-business services (B2B) that currently are not subject to IVU, and designated professional services will be subject to a commonwealth IVU of 4%. The municipal IVU will not apply on these services.
The expansion of the IVU scope is considered as part of the transition to the new value added tax (VAT) that could replace the commonwealth IVU effective April 1, 2016.
Read a September 2015 report [PDF 74 KB] prepared by KPMG’s State and Local Tax practice.
© 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.