Puerto Rico – AD 16-07: SUT…VAT…SUT…VAT…The Latest As Of Monday April 18, 2016

SALT Report 3796 – The Puerto Rico Treasury still deciding between VAT and SUT transition, timing and details. The latest per Administrative Determination 16-07.

On April 18, 2016, the Puerto Rico Department of the Treasury issued Administrative Determination 16-07 (“AD 16-07”).  AD 16-07 incorporates most of the provisions of Administrative Determination 16-01 (Released February 24, 2016), which had been partially repealed by Administrative Determination 16-04 (Released March 8, 2016) after the VAT effective date was postponed from April 1, 2016 to June 1, 2016. A notable difference between AD 16-01 and AD 16-07 is that AD 16-07 lacks guidance related to refunds of VAT paid in excess.

Summary details:

Just ask SURI – The “Unified Internal Revenue System” known as SURI will be established in order to unify the existing tax systems (VAT and SUT for starters). PICO will continue to be used for other reporting purposes Declaration of Imports, Tax on Imports Monthly Return. PICO information will automatically be transferred to the SURI system.

New VAT Monthly Return due July 20, 2016 – This return will be due on the 20th of every month. The first VAT monthly return will to be filed through SURI is due July 20, 2016. SURI will automatically transfer any existing SUT credits or overpayments from PICO. All returns and payments are to be made electronically through SURI.

Merchants’ Registry Certificate Registration open June 1, 2016 – All Merchant’s Registration Certificates (MRC’s) are set to expire on July 20, 2016 and taxpayers must apply for a new VAT MRC through SURI – Just ask SURI. Registration will become available on June 1, 2016. Businesses importing goods will continue to use both the PICO and SURI system due to the filing requirements of the Tax on Imports Monthly Return to be filed through PICO.

Small Merchant Exemption – The Small Merchant Exemption has been raised from $50,000 a year to $125,000 a year. A small merchant (and customer) is exempt from collection and filing of the VAT Monthly Return. Be mindful of the Muni – certain local municipalities deviate on the threshold for small business and remain at $50,000.

VAT Exemption Certificates – As of March 1, 2016 Treasury is not accepting renewals for Reseller and Municipal SUT Exemption Certificate and Manufacturing Plant Exemption Certificate. Eligible outstanding Reseller Certificates will be valid until June 30, 2016. Additional guidance will be released in the future regarding VAT exemption certificates.

Fiscal Vouchers Compliance Revised – Compliance with the fiscal vouchers and debit and credit notes is suspended until SURI has an answer – SURI is being asked now. Until SURI responds VAT credit inputs will be handled the old fashion way – keep your receipts for 6 years. Additional reporting requirements exist for businesses over $40,000,000 annual business volume.

Designated Professional Services Transition June 1, 2016 – Designated professional services rendered prior to June 1, 2016 will be subject to the 4% SUT provided the invoice is sent prior to June 20, 2016. For invoices issued after June 20, 2016 the date of the services rendered will be assumed to be the date of invoice and thereby be subject to the VAT of 10.5%.

For further Information:

AD 16-07 April 18 2016 in Spanish

AD 16-04 March 8 2016 in Spanish

AD 16-01 February 24 2016 in Spanish