Puerto Rico Now Taxes Business to Business Services and Designated Professional Services

Sep 30th, 2015

Effective October 1, 2015, Puerto Rico taxes services sold to businesses and designated professional services. The tax rate for these services is 4%

Business to business services include all services provided by registered merchants to other registered merchants. There are some exemptions and exclusions. Services that are excluded from the definition of business to business services include bank charges; collection services; security services; cleaning, laundry, and waste disposal services; uncapitalizable repair and maintenance services; telecommunications services; and motor vehicle operating leases. These services remain taxable at the full rate of tax even when provided business to business. The current full tax rate is 11.5% (including the 1% municipal tax).

Designated professional services are also taxable at the 4% rate, even if the services are provided to a non-business customer. Designated professional services include:

(1) legal services and
(2) services provided by the following licensed professionals:
(a) agronomists;
(b) architects and landscape architects;
(c) CPAs;
(d) real estate companies, sellers, and brokers;
(e) professional draftspersons;
(f) professional real estate appraisers;
(g) geologists;
(h) professional engineers and surveyors; and
(i) return specialists who prepare tax returns, statements, and refund claims.

Note that Puerto Rico does exempt certain services from both the full rate and lower 4% rate.

http://www.hacienda.gobierno.pr/publicaciones/determinacion-administrativa-num-15-17