Hacienda eliminates B2B SUT for some PYMES
The Puerto Rico Treasury Department (Hacienda) and has issued Circular Letter CCRI 19-05, to implement the elimination of the 4% Sales and Use Tax (SUT). This will be applicable for PYMES with yearly gross revenues of $200,000.00 or less. The exemption includes some designated professional services and other merchants.
The 4% services SUT (IVU in spanish) is a tax applicable to designated professional services like CPA’s, lawyers, engineers, etc. Amendments to the current tax Code enabled the elimination as of March 1, 2018.
Among the merchants benefiting from this amendment are: engineers, CPAs, Architects, and Geologists. Also includes other services rendered by PYMES directly to other businesses (B2B).
To determine that the business does not exceed the $200,000.00 gross revenues you will need to view figures of year 2018. If you have multiple businesses you would need to add up the revenues from all of them.
Hacienda has stated that qualifying businesses will automatically receive their new Merchant Certificate at the SURI portal. It is very important to state that if you receive an exemption Certificate but you understand that your business is not entitle to it, you must notify Hacienda and keep collecting the corresponding SUT, as you could be subject to interest and penalties in the future.
Another important aspect of the exemption is that it only applies to services and not to other taxable items. This means that if your business provides services and sells other products you will need to keep collecting the corresponding SUT on products. You must forward the money to Hacienda even thought you have an exemption on the services that you provide.
CCRI 19-05 provides some examples on the implementation of this code amendment. Nevertheless there could be some confusion on this matter. We remain at your service should you need help… you can check information posted in our blog or you can always ask your CPA about this and other matters that affect your business.