Tax & Accounting Blog

Puerto Rico Issues VAT Guidance

Blog, Indirect Tax, ONESOURCE May 5, 2016

Earlier this week we told you about legislation passed by the Puerto Rico House of Representatives providing for the repeal of Puerto Rico’s upcoming June 1, 2016 transition to Value Added Tax (VAT). The Governor has threatened to veto that repeal. Additionally, VAT had been scheduled to take effect April 1, 2016, but was delayed in order to provide taxpayers more time to prepare for the transition. Prior to last couple of weeks there had also been relatively little guidance available on what changes would be required to comply with the new VAT regime. Well all of that (and depending on the status of the Legislation, none of that) has changed. The Department of Revenue has issued numerous guidance documents for VAT:

 

A PowerPoint presentation (Spanish);

The official monthly VAT return (Form AS 2915.1G); 

Instructions (English) for filing out the monthly VAT Return;

A table (Spanish) summarizing the differences between Sales Tax (IVU) and VAT (IVA);

Proposed VAT regulations (Spanish); and

An administrative determination summarizing the registration and reporting requirements. 

 

On June 1 the Department of Revenue is transitioning to a new electronic reporting system called the Unified System of Internal Revenue (“SURI”). SURI will eventually become a centralized reporting tool for all taxes administered by the Department of Revenue including VAT. Users of the current PICO system will have their information transferred to SURI and will be able to use the same log-in information and merchant registration number. There are transitional rules for existing contracts and services subjecting them to sales tax and reporting via PICO until July 1, 2016. All other sales will be required to collect VAT as of June 1, 2016 using the new invoicing requirements. VAT Tax Receipts must contain information as provided by Section 4130.02(b)(4), which includes the name, address, and registration of the seller and buyer, the date issued, the receipt number, description of goods/services sold, amount of sale, amount of VAT, and total amount of the invoice.

Of course all of this is dependent on the Puerto Rico Legislature’s inability to override the Governor’s threatened veto.