Certain Remote Sellers Required to Collect Tax on Puerto Rico Sales

Friday, June 16th, 2017

Puerto Rico Department of Revenue.
Puerto Rico

Effective April 29, 2017, Puerto Rico has changed the definition of "merchant" to require some remote sellers to collect Puerto Rico sales tax.

The new definition of "merchant" includes provisions stating that sellers have nexus with Puerto Rico - and must collect tax on sales - if they regularly and continually (1) advertise through the mail or any electronic means or (2) sell items through the internet and send them from abroad into Puerto Rico.

The new law does not require merchants to collect tax if they qualify as non-withholding agents. A merchant is a "non-withholding agent" if (1) it is dedicated to mail order sales (e.g., Internet sellers) and (2) its only contact with Puerto Rico is its customers.

Although non-withholding agents do not have to collect and remit tax, effective July 1, 2017, they must provide certain information to their buyers and the Department of Treasury. They must (1) put buyers' tax reporting and payment obligations on their invoices, (2) send quarterly reports to the Department of Treasury on sales that occur in Puerto Rico, and (3) send annual notices to all of their Puerto Rico customers. Non-withholding agents will be subject to penalties if they fail to provide these notices and reports.


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