Sales & Use Tax (IVU)

The new Sales & Use Tax (‘IVU’ in Spanish) which became effective November 15, 2006 includes a 5.5 percent sales tax for the central government and up to 1.5 percent for local governments which can impose their own sales tax.

This tax applies to most consumer goods- sold, used, stored or used- but does not apply to fresh food (unmixed, served without utensils, unheated) or cars (already subject to a different tax). Services are taxable unless specifically excluded. For example, funeral services are not exempt but educational, insurance, medical and legal are. Manufacturers are excluded.

Merchants selling goods subject to the tax are deemed withholding agents and must collect and remit tax along with the filing of monthly returns. All merchants doing business in Puerto Rico must register with the Treasury Department (regardless of whether they are exempt or not) and request a Certificate of Merchant Registry. This can be done over the phone by calling 1 888 721 5551, by e-mail - ivuconsultas@hacienda.gobierno.pr or online at: http://www.hacienda.gobierno.pr/ivu/.

Merchant1164299062834 The Merchant Certificate (or Certificate of Exemption, as the case may be) will be issued by the Treasury Department and it will be the merchant’s authorization to do business in Puerto Rico and sell taxable goods subject to the ‘IVU’. Of course this is just one of many authorizations and permits a business must have before it can lawfully operate in the Island.

The Certificate of Exemption identifies a Merchant as a re-seller or manufacturer exempt from payment of the IVU in purchases related to its business activity. All withholding must be informed in a monthly return Planilla_1 that can be filed over the Planilla_ivu2 phone, online (www.hacienda.gobierno.pr ) or via mail: DEPARTAMENTO DE HACIENDA PLANILLA MENSUAL IVU PO BOX 9024140 SAN JUAN, PR 00902-4140 It must be done no later than the 20th day of the following month of the date the transaction took place. Depending on the method of filing, payment can be made through a variety of means including check or money order or electronic transfer of funds.

Merchants with a volume of sales exceeding $500,000 must file the return and pay through electronic means. You will need your Sales and Use Tax Registration Number (IVU) to file and pay your business taxes online. However as of this article, it seems that the Treasury’s online paying system is still in the testing phase.