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TaxBites 2019-10

Act 257-2018 (Tax Reform) created an exemption from the collection and payment of the Sales and Use Tax (SUT) Surcharge on the sale of certain taxable items (prepared food, carbonated drinks, pastries and sweets), which are made by those “restaurants” that obtain the proper authorization and certification of the Puerto Rico Treasury Department (PRTD). This exemption would allow these merchants to collect SUT at a reduced rate of 7% instead of the 11.5%.

Eligibility Requirements

Those merchants interested on the reduced SUT rate must comply with all of the following requirements:

  1. Merchant’s Registration Certificate with at least one of the following NAICS codes:
    • 72231 – Food Service Contractors
    • 72232 – Caterers
    • 72233 – Mobile Food Services
    • 72241 – Drinking Places (Bars and Canteens)
    • 72251 – Restaurants and Other Eating Places
  • Must have filed all its SUT returns (Imports Return, Monthly SUT Return, etc.)
  • Must not have tax debts of any kind with the PRTD. If there is any debt, it must be under a payment plan.
  • Must maintain a Fiscal Terminal at each Point of Sales
    • Merchant must be in compliance with the requirement to install, own and maintain, in each of its sales points that they have in their commercial locations, a fiscal terminal that meets the specifications provided by the PRTD.
    • Regardless of what was previously stated by the PRTD regarding volume of sales or of the total transactions made during the year, any merchant who is interested in the reduced rate, must maintain a fiscal terminal.
    • Those merchants who do not have a fiscal terminal but wish to be eligible for the reduced rate should contact any of the certified distributors to coordinate the installation of the terminal.

Process to obtain the Authorization for the Reduced SUT Tax Rate

  1. On Monday, September 23, 2019, merchants who meet all the requirements established above will have available, through their SURI account, a certificate of “Authorized Business – Reduced Rate for Prepared Food” for each commercial location that qualifies.
    • Said certificate authorizes the merchant to charge, as of October 1, 2019, the reduced SUT rate of 7% in the sale of Prepared Foods in the commercial location for which said certificate was issued.
    • The Certificate must be placed in a visible place at the entrance door of the commercial location, so that the consumer recognizes that it is a business authorized to charge the SUT Reduced Rate.
    • All Certificates will be valid until September 30, 2020, regardless of the date of issue. On September 30 of each year, those merchants who continue in compliance will automatically have the Certificate available through their SURI account.
    • Merchants with locations registered under any of the listed NAICS codes that do not receive the Certificate, will receive, through their SURI account, a communication indicating the reason why they do not meet the requirements established to obtain said certificate.
    • Those merchants that do not comply with all requirements that do comply on a later date may request the Certificate through their SURI account.
    • The merchant who receives a Certificate but understands that it is not eligible for it or that, even if all the established requirements are met, does not sell prepared food in the commercial location for which said certificate was issued, must request its cancellation. The cancellation request is made through the merchant’s account in SURI.
      • In these cases, the merchant must continue charging the SUT rate corresponding to its business activity. Those merchants who do not request the cancellation of the Certificate when applicable, may be subject to the imposition of interest, surcharges, fines and penalties.

About the Author

Carrion Sanchez LLC
Carrion Sanchez LLC

Carrión Sánchez, LLC is a highly dynamic legal firm specialized in tax and corporate matters for high-net-worth individuals and businesses within and without Puerto Rico. Contact Us at [email protected]

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