Sales Tax in Puerto Rico: Everything Sellers Need to Know
If you're a business owner or remote seller looking to expand into Puerto Rico, having a good grasp of the local tax landscape is essential. While Puerto Rico is a U.S. territory, it has its own tax system governed by the Puerto Rico Treasury Department (Departamento de Hacienda). Whether you’re selling physical goods or taxable services, staying compliant with Puerto Rico sales tax laws can help you avoid penalties and maintain smooth operations.
In this comprehensive guide, we’ll cover everything you need to know about sales tax in Puerto Rico, including how it's administered, who needs to collect and remit sales tax, what constitutes taxable items, economic nexus thresholds, and how to register for a sales tax permit.
Key takeaways
- Puerto Rico has its own sales and use tax system (IVU) with a total rate of 11.5%, separate from U.S. state taxes.
- Remote sellers must collect sales tax if they meet economic nexus thresholds: $100,000 in gross sales or 200 transactions.
- Many goods and services are taxable (including SaaS), and sellers must register via the SURI portal, collect the right tax, and file returns regularly.
Understanding sales tax in Puerto Rico
Puerto Rico imposes a sales and use tax (IVU or Impuesto sobre Ventas y Uso), which is similar in function to state sales taxes in the mainland U.S. The base sales tax rate is composed of two parts:
- A 10.5% tax rate imposed by the Puerto Rico government
- A 1% municipal tax rate, added by local municipalities
This brings the total sales tax rate to 11.5%, making it one of the highest sales tax rates in U.S. jurisdictions.
Use tax
In addition to sales tax, Puerto Rico also enforces a use tax on taxable items acquired outside the territory for use within it. This typically affects consumers or businesses that buy goods from unregistered sellers or from online retailers that don’t collect Puerto Rico sales tax.
Who must collect sales tax in Puerto Rico?
You are required to collect and remit sales tax in Puerto Rico if you meet either of the following criteria:
Physical presence (sales tax nexus)
If your business has a physical presence, such as a store, warehouse, office, or employees, then you’ve established a sales tax nexus. This obligates you to collect and remit Puerto Rico sales tax on taxable transactions.
Economic nexus
Puerto Rico follows an economic nexus model similar to many U.S. states. This means that remote sellers—businesses that don’t have a physical presence in Puerto Rico—can still be required to collect tax if their total gross sales into the territory exceed certain economic nexus thresholds.
As of the latest guidelines, the threshold for establishing economic nexus in Puerto Rico is:
- $100,000 in gross sales in prior taxable years, or
- 200 separate transactions with customers in Puerto Rico
If you meet or exceed these thresholds, you're legally obligated to collect and remit Puerto Rico sales tax.
Marketplace facilitator laws in Puerto Rico
Like many U.S. states, Puerto Rico has implemented marketplace facilitator laws to ensure efficient collection of sales tax on third-party sales. A marketplace facilitator is a business or platform that facilitates retail sales by connecting buyers and third-party sellers—Amazon, eBay, Etsy, and Walmart Marketplace, for example.
Under these laws, the responsibility to collect and remit Puerto Rico sales tax shifts from the individual seller to the marketplace facilitator when sales occur through the platform.
What does this mean for sellers?
If you sell exclusively through a registered marketplace facilitator, you typically don’t need to collect and remit sales tax for those transactions yourself. The facilitator is responsible for:
- Calculating the correct sales tax rate
- Collecting tax from the customer at checkout
- Remitting the tax to the Puerto Rico Treasury Department
- Filing the appropriate returns
However, even if you’re not required to collect tax directly, you may still have other obligations, including:
- Registering for a sales tax permit (in some cases)
- Reporting your total gross sales separately from your tax returns
- Monitoring whether your sales through and outside of marketplaces cross economic nexus thresholds
Mixed selling models
If you sell both on a marketplace and through your own website or channels (like Shopify or direct B2B), you may still be responsible for collecting and remitting Puerto Rico sales tax on those non-marketplace sales.
Always confirm whether the marketplace you use is registered as a facilitator with the Puerto Rico Treasury Department. If it is not, the obligation to collect tax may fall back on you, even if you assumed otherwise.
How to register for a sales tax permit
Before you can start collecting sales tax, you must register with the Puerto Rico Treasury Department to obtain a sales tax permit.
Here’s how:
- Visit the Puerto Rico Treasury Department’s SURI portal (Sistema Unificado de Rentas Internas).
- Create an account and submit your business information.
- Apply for a Merchant’s Registration Certificate (Certificado de Registro de Comerciante).
- Once approved, you’ll receive your sales tax ID and be authorized to collect Puerto Rico sales tax.
It’s important to display your Merchant’s Certificate at your business location and renew it annually as required.
What is taxable in Puerto Rico?
Understanding what is subject to tax is key to compliance. Generally, Puerto Rico sales tax applies to the following:
Taxable items
- Tangible personal property (e.g., electronics, clothing, furniture)
- Prepared food and certain beverages
- Admission to events or entertainment venues
Taxable services
Puerto Rico taxes many services that are not taxable in other jurisdictions. Examples of taxable services include:
- Repair and maintenance
- Security services
- Cleaning and janitorial services
- Telecommunications
- Digital services
It’s critical to determine whether your specific service offering falls under Puerto Rico’s taxable categories.
Is SaaS taxable in Puerto Rico?
Yes, Software as a Service (SaaS) is considered a taxable service in Puerto Rico. If you provide access to software via the cloud for a fee, such as CRM platforms, accounting tools, or collaboration software, your service is generally subject to the Puerto Rico sales tax rate of 11.5%.
Whether you’re based locally or are a remote seller with economic nexus, you’re required to collect and remit sales tax on SaaS sales to customers in Puerto Rico. As always, exemptions may apply in specific B2B scenarios if the buyer has valid documentation, but these must be carefully validated.
Filing and remitting Puerto Rico sales tax
Once you’re registered, you’ll need to file returns and remit sales tax on a regular basis. Filing frequencies are typically:
- Monthly for businesses with higher volume
- Quarterly for businesses with moderate volume
Returns are filed via the SURI portal. Be sure to report your total gross sales, including exempt and taxable sales, and calculate the tax due based on the taxable items sold.
Discounts and exemptions
Sales tax discounts
Puerto Rico allows sales tax discounts for early filers and those who pay electronically through the SURI portal. These discounts are limited but can help reduce your tax liability if you comply consistently and file on time.
Exemptions
Certain sales are exempt from sales tax in Puerto Rico, including:
- Prescription medications
- Some food items
- Government agency purchases
- Sales for resale (with a valid exemption certificate)
Be sure to maintain documentation for exempt sales in case of an audit by the Puerto Rico government.
Sales tax holidays
Puerto Rico also offers sales tax holidays during specific times of the year, typically back-to-school season or natural disaster preparedness periods.
During these holidays, certain items—like school supplies, clothing, and emergency equipment—can be purchased without sales tax.
Retailers must still report these transactions, even if no tax is collected, and ensure they meet the eligibility criteria for participating in the sales tax holiday.
Puerto Rico income tax
It's important to note that doing business in Puerto Rico may also trigger Puerto Rico income tax obligations. Corporations and individuals conducting business in the territory are generally subject to local income tax, separate from U.S. federal tax obligations.
The Puerto Rico Treasury Department administers income tax filings through the same SURI portal. Remote sellers with economic nexus might not be subject to Puerto Rico income tax, but this depends on the structure and location of your business operations.
Important compliance tips for sellers
- Track your sales closely
Monitor your total gross sales into Puerto Rico, especially if you’re a remote seller nearing the economic nexus thresholds. - Keep good records
Maintain detailed records of all taxable and exempt transactions, including invoices, exemption certificates, and payment confirmations. - Stay updated
Puerto Rico's tax laws can change, and the Puerto Rico Treasury Department may issue new regulations affecting your business. - Remit on time
Use the SURI system to file and remit sales tax before the deadline. Late payments can incur penalties and interest. - Don’t forget use tax
If you import goods for your own business use from outside Puerto Rico, remember to calculate and pay use tax.
Conclusion
Doing business in Puerto Rico can open doors to a vibrant and growing market, but it also requires an understanding of the unique tax requirements that govern commerce in the territory. From registering for a sales tax permit, to tracking your economic nexus, to accurately applying the correct sales tax rate, compliance is crucial.
Whether you’re a local retailer or a remote seller entering the market, having a solid grasp of the rules for sales tax in Puerto Rico will help you build trust with customers, avoid costly errors, and ensure long-term success.
Do you need help with your sales tax compliance? Book a free call with one of our sales tax experts to find bespoke solutions for your business, optimize your tax costs, and reach millions of new potential customers.
Frequently Asked Questions
Is Puerto Rico's sales tax the same as U.S. state sales taxes?
No, Puerto Rico has its own tax system with a combined 11.5% sales and use tax (IVU), separate from U.S. state taxes.
Who needs to register for a Puerto Rico sales tax permit?
Any business with a physical presence or remote sellers exceeding $100,000 in sales or 200 transactions must register via the SURI portal.
Are digital products and SaaS taxable in Puerto Rico?
Yes, SaaS and many digital services are taxable at the standard 11.5% rate.
Do I need to collect sales tax if I sell only through marketplaces like Amazon or eBay?
Not if the marketplace is a registered facilitator; they collect and remit tax for you, but you may still need to report sales.
How often do I need to file sales tax returns in Puerto Rico?
Returns are filed monthly or quarterly via the SURI portal, depending on your sales volume.
What items or services are exempt from Puerto Rico sales tax?
Exemptions include prescription drugs, certain foods, resale items, and government purchases, with proper documentation.
