June 23, 2017 Puerto Rico Secretary of Treasury extends the effective date for the obligation to remit the 1% municipal SUT on imports to Puerto Rico's Treasury Department to August 1, 2017 Puerto Rico's Treasury Department (PRTD) issued Administrative Determination (AD) 17-04 to extend the effective date for the obligation to remit the 1% municipal sales and use tax (SUT) on imports of tangible personal property from the municipality to the PRTD and to confirm that the new reporting requirements for non-withholding agent merchants are effective July 1, 2017. Effective date for remitting 1% municipal SUT to PRTD is extended to August 1, 2017 The PRTD announced through AD 17-04 that the effective date for the collection of the 1% municipal SUT on imports of tangible personal property is extended from April 29, 2017 to August 1, 2017. As such, all taxpayers who import tangible personal property for use or consumption in Puerto Rico and are required to pay the 1% municipal SUT, must pay it to the PRTD, instead of the municipalities beginning August 1, 2017. (For more information on Act 25-2017, see Tax Alert 2017-824.) For bonded merchants, if the bond is sufficient to cover the SUT on purchases of imported property, the bond could be used to cover the SUT, including the municipal SUT. If the bond is not sufficient to cover the SUT on imports, the bonded merchant must remit the SUT, including the municipal SUT, for all declared goods before the merchandise will be released. Bonded merchants who increase their bonds should notify the Director of the Office of Consumption Tax Bureau no later than July 31, 2017. The notification should include a rider that indicates the amount of the increase. PRTD confirms that the new reporting requirements for non-withholding agent merchants start on July 1, 2017 The PRTD confirmed that it plans to enforce the new reporting requirements introduced by Act 25-2017 starting on the effective date provided under the statute, which is July 1, 2017.Merchants who are non-withholding agents and have requested and agreed to be considered as voluntary withholding agents are not subject to the notification requirement. Those merchants that are interested in being withholding agents would need to enter into an agreement with the PRTD.The AD also indicated that the PRTD is drafting regulations. Implications Notwithstanding that the PRTD administratively delayed the effective date for remitting the 1% municipal SUT to the PRTD, merchants should continue to pay the municipal portion to municipalities as they did before Act 25-2017.AD 17-04 also reiterates that reseller merchants that qualify for the 1% municipal SUT exemption will not be affected by the remittance changes made by Act 25-2017. Also, it is important to bear in mind that the July 1, 2017 date for the new reporting requirements still applies.As such, the position expressed in AD 17-04 shows that the PRTD intends to move forward with implementing the new reporting requirements by the July 1 due date, regardless of the short period of time left towards the effective date. ———————————————
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