Temporary Exemption of the Collection of the Sales and Use Tax on Basic Necessities Related to the Prevention and Treatment of COVID-19 and on Prepared Foods

 

In response to the Governor of Puerto Rico’s announcement on exempting from the collection of Sales and Use Tax (SUT) on Basic Necessities, the Treasury Department (TD) issued Administrative Determination No. 20-07 (DA 20-07) to inform on the specific products included under the definition of Basic Necessities, or articles needed for the prevention and treatment of COVID-19. 

Afterwards, on March 19, the TD issued Administrative Determination No. 20-08 (DA 20-08) to extend the exemption to prepared foods. 

 

Temporary Exemption on the Collection of SUT for Prepared Foods

By means of DA 20-08, the TD exempts the acquisition of Prepared Foods from the collection of both state and municipal SUT.  The exemption will be in effect from 12:01 a.m. of March 20, 2020 and will end at 11:59 p.m. of April 19, 2020.

The Temporary Exemption does not apply to the sale of alcoholic beverages.  It applies to all Prepared Foods sold with utensils. 

Temporary Exemption on the Collection of SUT for Basic Necessities

 

This temporary exemption will be in effect from 12:01 am of March 23, 2020 to 11:59 pm of April 30, 2020

The term Basic Necessities includes the following articles: 

  • Hand sanitizers
  • Personal disinfection articles, such as soap, shampoo, and wet wipes
  • Disposable handkerchieves
  • Face masks
  • Isopropyl alcohol
  • Disinfectants and antiseptics
  • Household cleaners or disinfectants, such as, soaps, detergents, chlorine
  • Vinyl gloves
  • Analgesics and acetanomiphen or ibuprophen (tablets, suppositories, liquid)
  • Cold related medicines including antihistamine

Extension of the Definition of Essential Services

The TD also determines, that in order to comply with OE 2020-023, all services provided by individuals to make the necessary adjustments of the merchants’ SUT programs and systems will be considered essential services. 

Time frames for providing these services are as follow:

Programming for Prepared Foods:

Programming of systems for these items will only be effect for one (1) day from the date the DA 20-08 was published—March 19, 2020—and the date on which the exemption comes into effect—March 20, 2020. 

 

Programming for Basic Necessities:

Programming of systems for these items will only be effect for five (5) days from the date the DA 20-07 was published—March 18, 2020—and the date on which the exemption comes into effect—March 23, 2020. 

The definition of essential services applies exclusively to those individuals that provide the programming of systems for the collection of SUT and will only be in effect on the dates established by both DA 20-07 and DA 20-08. 

All individuals providing the computer program set-ups now considered an essential service must carry and keep a copy of DA 20-07 to prove they are providing such services to merchants or employers. 

Report on Exempt Sales

The merchant who sells these articles will inform of such sales on his SUT Monthly Tax Return (Model SC 2915), on the line titled “Sales of Exempt Tangible Property”. 

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