VAT, GST and Sales Tax in Puerto Rico


Name of the tax Sales and use tax (SUT)
Local name Impuesto sobre ventas y uso (IVU)
Date introduced Nov-06
Trading bloc membership None
Administered by Departamento de Hacienda de Puerto Rico/Puerto Rico Treasury Department (
SUT state standard rate 10.50%
SUT municipal rate 1%
SUT special rate 4%
SUT number format Merchant identification number
SUT return periods Monthly
Threshold None

Scope of the tax

Merchants engaged in businesses that sell taxable items are responsible for collecting the SUT as a withholding agent. In general, the standard tax rate applies to the following taxable items:

  • Taxable personal property − property that can be seen, weighed, measured or touched, or is in any way perceptible to the senses.

It excludes, among other items, money, cash equivalents, stocks, bonds, insurance, other obligations, automobiles, trucks, tractors, buses, intangibles, gasoline, aviation fuel, gas oil, die­sel fuel, electric power and water supplies.

  • Taxable services – as a general rule include any service ren­dered to any person, except services provided by designated professionals and services rendered to other merchants, among others

In general, a person who buys, consumes, uses or warehouses for use or consumption a taxable item is the one responsible for the payment of the SUT to the Puerto Rico Treasury Department (PRTD).

All merchandise introduced into Puerto Rico is subject to the payment of use tax upon introduction. The person responsible for the payment of use tax is the importer of record. To take posses­sion of the merchandise, the importer of record will need to submit a declaration of imports for use and pay the correspond­ing use tax. A bond can be requested to postpone the payment of the use tax until the 10th of the month following the introduction of the merchandise.

SUT rates

In Puerto Rico, the following are the SUT rates:

  • State standard rate: 10.5%
  • Municipal rate: 1%
  • Special rate: 4%

Special 4% SUT rate. A 4% Special SUT rate is applicable to services classified as “designated professional services” and “services rendered to other merchants” since 1 October 2015. The Code also establishes an obligation to self-assess the SUT with respect to services rendered by persons that are not engaged in a trade or business in Puerto Rico to a merchant in Puerto Rico.

As a general rule, the services subject to the 4% special SUT rate include the following:

  • Designated professional services: legal services (subject to certain limitations) and services provided by the following pro­fessionals licensed by the respective Board of Examiners of the Puerto Rico Department of State: agronomist; architects and landscape architects, Certified Public Accountants, brokers, sellers and real estate companies; professional draftsmen; pro­fessional real estate appraisers; geologists; engineers and sur­veyors; and services rendered by a “tax returns, statements or refund claims specialist”
  • Services rendered to other merchants: services rendered to a person engaged in a trade or business or for the production of income, including services rendered by a nonresident person to a person located in Puerto Rico, regardless of the place where the service was rendered, provided that said service is directly or indirectly related with the operations or activities carried out in Puerto Rico by such person

Services subject to the 4% Special SUT rate are reported in the SUT Monthly Return Applicable to Services Rendered to Other Merchants and Designated Professional Services (form AS 2915.1 F), which is filed electronically through the portal of merchants system (formerly named PICO, replaced with a new version named SURI from November 2016) no later than the 20th day of the month following the month in which the 4% Special SUT was collected.


SUT exemptions apply to the following:

  • Eligible resellers: duly registered merchants that purchase tax­able items principally for sale to persons that may acquire them exempt from the payment of SUT or for exportation
  • Manufacturing plants: physical facilities wherein raw material, machinery and equipment are used in a manufacturing process. To claim the exemption, all manufacturing plants must have an active manufacturer’s ID
  • Export sales: taxable items sold for use and consumption out­side Puerto Rico, even when the sale takes place in Puerto Rico, if exported from Puerto Rico within 60 days from the date of sale and certain conditions are met
  • Export services: taxable services are considered sold for use or consumption outside of Puerto Rico when the purchaser receives the benefit of the rendering of such services outside of Puerto Rico.

Eligible resellers and manufacturing plants must request a cer­tificate of exemption from the Secretary of the PRTD (Secretary). In addition, a certificate of exempt purchase must be submitted to the seller in each transaction, subject to certain conditions.

The following items, among others, are also exempt from SUT:

  • Certain food items
  • Funeral services
  • Prescription medicines
  • Machinery and equipment used in exempt manufacturing operations
  • Medical-surgical material
  • Supplies, articles, equipment and technology used to render health services
  • Articles and equipment used to compensate for physical or physiological deficiencies of disabled persons
  • Tuition and monthly charges paid to licensed child care centers
  • Real property leases

In addition, the transfer of assets pursuant to a corporate reorga­nization, including the sale of all or substantially all of the assets of an ongoing business that takes place outside the normal course of business, is generally exempt from SUT.

Merchant’s registry

A person who wishes to do business in Puerto Rico as a merchant must file with the PRTD a Request for Certificate of Merchant’s Registration. This application must be filed with the Secretary before the person, business, partnership or corporation com­mences the operation of a business. After approval, the Secretary grants the applicant a Certificate of Merchant’s Registration, which must be displayed at all times in a place visible to the general public in each place of business for which it is issued.

To be considered a “merchant,” the law provides that “nexus” has been created if a person satisfies any of the following conditions:

  • It has an establishment or offices in Puerto Rico or it maintains or it uses in Puerto Rico, directly or through a subsidiary or affiliate, an office, distribution warehouse or other establish­ment.
  • It has employees, agents or representatives in Puerto Rico who solicit business or carry out business transactions.
  • It owns tangible personal property or real property in Puerto Rico.
  • It has created a nexus with Puerto Rico in any way, including but not limited to the execution of purchase contracts in Puerto Rico; direct marketing or purchase by mail, radio, distribution of unsolicited catalogs, through computers, television or any other electronic means; or advertisements in magazines or newspapers.
  • It has an arrangement with residents of Puerto Rico in which the residents refer possible buyers to an online website. Such arrangement will create nexus when the gross income generat­ed from the sales exceeds USD10,000 in a period of 12 months.
  • The person has sufficient connections, or a relationship with Puerto Rico or its residents, with the purpose or objective of creating a sufficient nexus with Puerto Rico.

It has been noted that these nexus rules are broader than the US Supreme Court ruling in Quill v. North Dakota, which held that nexus requires physical presence.

Filing and payment system

All merchants must create an account in the merchant portal, SURI, in order to be able to comply with all the monthly filings. All filings will be done electronically through the SURI system.

As previously mentioned, in order to take possession of the mer­chandise the importer of record will need to file a declaration of imports for use. A declaration must be filed every time merchan­dise is introduced into Puerto Rico. Furthermore, the declaration must be accompanied by the corresponding use tax payment for the merchandise. If the merchant becomes a bonded merchant, the payment will be postponed until the 10th day of the month following the introduction.

All importers must file a monthly use tax on imports return on or before the 10th day of the month following the introduction of the merchandise. This return will be a summary of all the declara­tions filed throughout the previous month and will generate a credit to be claimed on the monthly SUT return as long as the merchant has a Reseller Certificate. The credit will be generated with regards to the use tax paid upon introduction of items imported for resale.

All merchants must file a monthly SUT return on or before the 20th day of the month following the month in which the tax was collected. Every merchant will claim a credit for the use tax paid for items bought for resale. Merchants that possess a valid Reseller Certificate will be able to collect a full credit on the liability reflected in the SUT return. A zero tax return is required if no SUT payment is made. In general terms, the payment of SUT is divided in the following percentages:

  • 5% to the PRTD
  • 1% to the municipality using the form provided by each munic­ipality

As mentioned above, services subject to the 4% Special SUT rate must be reported in the SUT Monthly Return Applicable to Services Rendered to Other Merchants and Designated Professional Services. Beginning 1 October 2015, a return must be filed on or before the twentieth (20th) day of the month fol­lowing the transaction subject to tax. The only services to be reported in this return are designated professional services and services rendered between businesses, which are subject to the 4% Special SUT; this return would also be used to report the self-assessed 4% Special SUT.


Interest. If no payment is made on or before the corresponding due date of the transaction subject to the tax, interest will be imposed at an annual rate of 10% from the date the return was required to be filed until the date of payment.

Surcharges. For any case in which the payment of interest is required, a surcharge of 5% of the balance due applies if the delay exceeds 30 days but does not exceed 60 days. The percentage increases to 10% if the delay exceeds 60 days.

Penalties. Listed below are selected penalties that can be imposed by the PRTD for noncompliance with SUT requirements:

  • Failure to register in the Merchants’ Registry – $10,000
  • Failure to display merchant certificate – $1,000
  • Display of fraudulent merchant certificate – $5,000
  • For each violation for not displaying separately the SUT on a receipt or other evidence of a retail sale – $100
  • Failure to remit the SUT – no less than 25% nor more than 50% penalty of the determined insufficiency, and 100% in cases of recurrent failure to remit
  • Failure to file SUT returns – the greater of $100 or 10% of the tax liability