When it comes to sales tax, Puerto Rico plays by its own rules. The island’s general sales and use tax, commonly referred to as Impuesto sobre Ventas y Uso (IVU), combining state and municipal rates, creating a structure that’s distinctly different from what most mainland businesses are used to. Whether you’re setting up shop in San Juan, expanding into Ponce, or selling across the island, understanding Puerto Rico’s unique tax requirements is essential. Let’s explore the details.
What is the sales tax rate in Puerto Rico?
The sales and use tax rate in Puerto Rico is 11.5%. The municipality where the sale took place receives 1% of that, and the government of Puerto Rico receives the remaining 10.5%.
What is sales tax in Puerto Rico?
The sales and use tax is applied to most sales in Puerto Rico. It’s the amount that the consumer pays when buying items, services, or attending an entertainment venue. The IVU can be applied to sports, recreation, or exhibition. As of 2021, businesses with over $100,000 in sales or 200+ transactions a year in Puerto Rico must register with the Departamento de Hacienda de Puerto Rico and collect and remit Puerto Rico sales tax.
How to calculate sales tax in Puerto Rico?
Calculating sales tax in Puerto Rico is fairly straightforward, with the general IVU rate being 11.5%. To figure out how much tax to charge, multiply the taxable sales price by 0.115.
For example, if you sell an item for $100:
$100 × 0.115 = $11.50 in sales tax
The customer would pay a total of $111.50.
It’s important to note that while most goods and many services are subject to the full rate, certain items, like prepared foods at eligible restaurants (7%) or professional services (4%), are taxed at reduced rates. Always confirm the correct rate before applying it to a sale.
Use our sales tax calculator
To make calculating sales tax easier, use our calculadora de impuestos sobre las ventas. Enter the price of your item or service, along with the applicable IVU rate, and the calculator will instantly show you the tax amount and total sale.
Are all goods and services taxable in Puerto Rico?
While Puerto Rico is a U.S. territory, the country operates on its own sales and use tax system. Most tangible personal property, digital products, and entertainment purchases are subject to the standard sales tax rate. Items such as clothing, furniture, electronics, and vehicles would be taxed at 11.5%. That said, not everything is taxed the same. Some goods and services qualify for a reduced rate, such as prepared foods at eligible restaurants, which are taxed at 7%, and certain professional services, which are taxed at 4%.
Puerto Rico sales tax exemptions
Some items are fully exempt from sales tax. These include prescription drugs, insulin, most unprepared food items, professional association dues, government-issued stamps, real estate transactions, lottery activities, and certain manufacturing supplies.
Taxable and non-taxable items and services can always change. Be sure to refer to the Puerto Rico Department of the Treasury for the latest updates.
Who pays sales tax?
Just like in many U.S. states, sales tax in Puerto Rico is considered a pass-through tax. This means the business owner is responsible for collecting the tax at the point of sale, but the actual cost of the tax falls on the buyer. The business then remits the tax to the Government of Puerto Rico Treasury Department.
What are business owners responsible for?
If you’re a business owner with a physical presence in Puerto Rico, or a remote seller whose annual sales into Puerto Rico exceed $100,000 or 200 transactions, you are required to collect sales tax. To do so, you must first register your business with the Puerto Rico Department of the Treasury. Once registered, you’re responsible for charging the correct tax rate, keeping accurate records, filing sales tax returns, and remitting the collected funds on time through SURI (Sistema Unificado de Rentas Internas), Puerto Rico’s online tax system.
With DAVO by Avalara, managing Puerto Rico sales tax doesn’t have to be stressful. Our solution automatically sets aside the IVU your business owes, preparing and filing your returns automatically, so you can stay on top of filing deadlines and avoid penalties. DAVO connects seamlessly with your existing POS system, ensuring that sales tax is collected accurately and remitted on time, freeing you to focus on running and growing your business.
How to register to charge sales tax in Puerto Rico?
To legally collect IVU in Puerto Rico, you must obtain a Merchant’s Registration Certificate (Certificado de Registro de Comerciante). Registration is done online through SURI. Simply create an account, complete the application, and follow the prompts. For convenience, you can switch the portal to English using the option in the top right corner.
When is sales tax due in Puerto Rico?
Puerto Rico sales tax is due no later than the 20th day of each month for the prior month. Therefore, sales made in the month of April are due May 20. However, when the 20th falls on a weekend or holiday, the due date is moved to the next business day.
Puerto Rico also offers discounts for businesses that collect and remit IVU on time, especially for early electronic filers. For on-time payments, eligible retailers can take a credit equal to the greater of 0.5% of the IVU payable or $10. For early payment, which must be submitted on or before the 15th of each month, merchants can receive a credit of 1.95% on the first $6,250 of IVU due, and 1% on any amount over that, up to a maximum of $500. Always check with SURI for the latest updates, as credits may change. To see all the other states that provide discounts for timely tax payments, explore our full guide on sales tax vendor discounts.
Make your sales tax less taxing with DAVO.
Where does the sales tax money go?
In Puerto Rico, sales tax (IVU) is collected through SURI and then divided between the Commonwealth government and local municipalities. Of the total tax, 10.5% goes to the Commonwealth government to fund public services and operations, while 1% is distributed to municipalities to support local services.
What if I forget to pay or can’t pay the Puerto Rico sales tax?
Missing your IVU payment or filing late comes with steep consequences. Business owners may face multiple layers of penalties, surcharges, and even personal liability if they fail to comply.
- Late filing: A penalty of 5% of the unpaid IVU per month (or fraction thereof), capped at 25% of the total tax due.
- Late payment: A penalty of 0.5% of the unpaid IVU per month (or fraction thereof), up to 25%, plus interest that accrues until the balance is paid in full.
- Surcharges: An extra 5% of the unpaid balance is added if payment is 31–60 days late, and 10% if payment is more than 60 days late.
On top of these financial penalties, the Puerto Rico Treasury Department (Hacienda) has the authority to place liens, seize business assets, and hold business owners personally liable for unpaid IVU. In extreme cases, criminal charges may also apply. For the most up-to-date interest rates, penalty policies, and guidance on resolving missed payments, always refer to the Department of the Treasury or SURI.
Let DAVO help manage your Puerto Rico sales tax
Ever miss an IVU payment deadline? Or struggle with Puerto Rico’s unique sales tax requirements? Do you worry about setting aside enough for your Puerto Rico sales tax obligations or question the cost-effectiveness of your current tax management approach?
If so, DAVO is the ideal solution for your business. It’s specifically crafted to work FORt business owners across the island who recognize their talents are better invested in growing their business than managing complex tax requirements. Let DAVO assist with your IVU responsibilities from start to finish.
DAVO brings automation to the Puerto Rico sales tax process—from daily collection to proper documentation to timely filings and payments. It works in perfect synchronization with your existing POS system, eliminating manual intervention. And because DAVO helps to ensure your Puerto Rico sales taxes will be calculated correctly and remitted on schedule, you gain both compliance confidence and valuable time to focus on your island business.
Choose your POS system to get started with DAVO today.
Puerto Rico Sales and Use Tax Help:
Departamento de Hacienda de Puerto Rico
(787) 622-0123
