Puerto Rico Enacts Temporary Small Taxpayer Exemption

The Treasury Department of Puerto Rico (Hacienda) issued Administrative Determination 17-26 which creates a sales and use tax exemption for all sales and purchases made by small and medium taxpayers. According to the new rule, all taxpayers with gross revenues during the previous 12 months of $1,000,000 or less will qualify. Under the rule, small business purchasers may acquire goods and services for resale tax free. Likewise, when items purchased for resale are sold at retail, tax should not be collected but rather should be reported as an exempt sale.

The exemption (which relates to both goods and services) is temporary in that it only applies between November 20 and December 31, 2017.

To qualify for the exemption, businesses will need to obtain a Temporary Exemption Certificate from the Hacienda to be displayed at their place of business. This exemption does not impact the requirement to file standard periodic returns. 

Author

Ramon Frias

Ramon is a Tax Counsel on the Regulatory Analysis team at Sovos. He is licensed to practice law in the Dominican Republic and is a member of the Dominican Bar Association. He has a Certificate Degree from Harvard University as well as a J.D. from the Universidad Autonoma de Santo Domingo. Ramon has written a number of essays about tax administration and has won the first prize in the international essays contest sponsored by the Inter American Center of Tax Administrations (CIAT). Prior to joining Sovos, Ramon worked for more than 10 years in the Department of Revenue of the Dominican Republic where he served as Deputy Director. He is proficient in French and Spanish.
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