The Puerto Rico Treasury (Hacienda) released Administrative Determination 20-19 allowing certain businesses to report and pay sales tax, using the cash method. Specifically, those taxpayers with 80% or more of annual revenue stemming from construction activities (as measured over the last 3 years) will now be able to report and remit sales tax based on when payments are received as opposed to when invoices were issued. Under this option, tax on sales made on credit are not paid until customers make payment. Cash-method sales tax compliance can, for certain taxpayers, provide significant cash flow advantages.
To qualify, taxpayers must hold a state registration certificate carrying a NAICS Code classifying them as a construction business. They should also notify the Hacienda of their election via the SURI portal. Once elected, the option applies only to transactions carried out after June 30 2020. For additional details, please review the complete regulation here.
