Puerto Rico Requiring Certain Merchants to Remit Sales Tax Twice a Month

Thursday, August 24th, 2017

A colorful street in Puerto Rico.
Puerto Rico

Puerto Rico has enacted a law requiring certain merchants to pay sales tax two times per month. The new requirement applies to two categories of merchants. These categories must pay tax on the 15th and the last day of each month.

The first category is large taxpayers. "Large taxpayers" include (1) commercial banks or trust companies, (2) private banks, (3) securities or broker houses, (4) insurance companies, (5) telecommunication businesses, and (6) any other merchant whose annual business volume is greater than $50 million. Large taxpayers must start using the new payment schedule on or before August 15, 2017.

The second category includes merchants whose monthly sales tax "deposited" averaged $2,000 or more in the previous calendar year. Puerto Rico defines "deposited" to mean the sum of sales and use tax deposited from a merchant's (1) imports and purchases of inventory for resale and (2) sales. Sellers that fall into this category must start using the new payment schedule on or before September 15, 2017.

The Puerto Rico Department of Treasury (DOT) has created a method to help merchants determine if they meet the $2000 criteria. The DOT determined the following:

  1. Merchants that sell tangible personal property and services subject to the 10.5% tax rate meet the $2000 criteria if their previous year's sales exceeded $228,600.
  2. Merchants that sell business-to-business services or professional services subject to the 4% tax rate meet the criteria if their previous year's sales exceeded $200,000.
  3. Merchants that sell taxable items or services subject to the 10.5% rate and the 4% rate meet the criteria if their previous year's sales exceeded $228,600.

Note that "voluntary withholding agents" making mail order sales into Puerto Rico are not required to make payments on this schedule. Also note that the new schedule does not apply to municipal tax payments made directly to municipalities.


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