Puerto Rico Treasury outlines ‘B2B’ tax exemption changes
The Puerto Rico Treasury Department announced Thursday it has issued a circular letter to guide retailers and service providers on changes in the Sales and Use Tax (IVU, by its initials in Spanish) exemption between business services, or “B2B”, which took effect July 1.
Prior to the cutoff date, all taxable services were exempted from paying IVU when they were provided between parties enrolled in the agency’s Merchants Registry, said Treasury Secretary Melba Acosta.
However, as of this week, the following services are not covered by the “B2B” exemption and, therefore, are subject to IVU: accounts receivables services (“collection services”), security services, cleaning services, laundry services, repair and maintenance services (non-capital) of real property and tangible personal property, bank charges (certain exceptions apply), telecommunications and waste collection services.
“Any merchant who provides the services described above will be obliged to collect, retain and deposit the IVU, even if they will be rendered to another merchant,” she added.
Meanwhile, she noted that Law 40, which amended Puerto Rico’s Internal Revenue Code and went into effect with the start of fiscal 2014, establishes that a merchant engaged in the repair business is not required to collect the IVU, when the repair service is provided to a registered dealer and the service is related to the buyer’s business. In view of this amendment, effective July 1, the merchant who buys a repair service, that is related to their business, will be responsible for paying IVU.
The agency also issued a bulletin directed to all merchants engaged in leasing motor vehicles to amend the definition of leasing as a taxable service under the Internal Revenue Code. An amendment to the Code establishes that daily rentals will be subject to IVU.
“During the first weeks of July, we’re working hard at Treasury to temper our internal regulations and procedures to changes to the law. We’re also focused on the mass dissemination and guidance on these changes to affected groups,” she said, adding all information will be available on the agency’s site at www.hacienda.pr.gov.