Although details are currently scant, Puerto Rico’s 2017-2018 budget legislation, if passed, could make two changes that will require taxpayers to make immediate adjustments to their current sales tax processes:
- The budget appears to require taxpayers who generally make payments in excess of $2000 monthly, to make two payments per month instead of one. The first payment would be due on the 15th and the second on the last day of the month. This process would apply to both state and local tax and could impact June payments made during the month of July.
- The budget also appears to modify the 4% reduced rate which applies to certain “business to business” transactions by replacing it with a 2% rate.
The Commonwealth of Puerto Rico faces enormous fiscal challenges and has a longstanding history of making dramatic and immediate changes to their sales tax rules intended to close their “tax gap.” Sovos will be monitoring the situation in Puerto Rico closely and will provide continued updates through this forum.