Puerto Rico, a U.S. territory, although uniquely situated as a part of the customs territory of the United States it simultaneously operates its own internal tax system for importations into Puerto Rico. This means importations of goods into Puerto Rico must meet all import requirements that any importation into the United States must meet. For example, importations are subject to duties, taxes, and fees imposed by CBP, and importations must meet the health, safety, and sanitary and phytosanitary requirements of a wide range of federal agencies such as the U.S. Department of Agriculture, the U.S. Consumer Products Safety Commission, the U.S. Food & Drug Administration, etc.
Meanwhile, importations into Puerto Rico are additionally subject to the territory’s own entry tax administered by the Departmento de Hacienda (“Hacienda”), a Puerto Rican governmental agency that serves the function of a territory treasury department. Puerto Rico’s unique entry tax is a component of a two-pronged tax system for goods, known as the Impuesto sobre Ventas y Uso (“IVU”) (in English, “Sales and Use Tax”). As the name suggests, the IVU is comprised of (1) sales tax, and (2) a use tax.
The sales tax functions similar to sales taxes elsewhere in the United States. In Puerto Rico, the Hacienda requires that sales taxes on goods and services be collected by goods and services providers and paid to the Hacienda on a monthly basis. On the other hand, the use tax is the amount that a party must pay when introducing an item to Puerto Rico for use and consumption in Puerto Rico. Generally, the use tax is 11.5 percent.
Goods which are being imported into Puerto Rico for consumption or use in the territory are subject to the use tax except for particular exceptions such as school supplies acquired during the back-to-school tax-free holiday, supplies used to render health services by hospital facilities, and supplies acquired by government agencies. Importers of goods into Puerto Rico are comprised of two categories: (1) secured importers, and (2) unsecured importers. Secured importers are those importers that have obtained authorization from the Director del Negociado de Impuesto al Consumo (in English, Director of the Consumption Tax Bureau) and has secured a bond for payment of the use tax. Meanwhile, unsecured importers are those importers who have not sought prior authorization from the Director of the Consumption Tax Bureau and/or have not secured a bond for payment of the use tax.
Both secured and unsecured importers must submit a detailed declaration of all imported merchandise, regardless of whether the merchandise is exempt from the use tax. This declaration is made via the Además de la Declaración de Importaciones (in English, “Import Declaration Form”) (see Model Form SC 2970). Furthermore, a Planilla Mensual de Impuesto sobre Importaciones (in English, “Monthly Tax Form”) must be submitted to the Hacienda (See Model Form SC 2915 D). The forms must be transmitted to the Hacienda via a portal known as SURI. The payment process differs for secured versus unsecured importers. While secured importers may pay the use taxes in a consolidated manner on a periodic basis, unsecured importers must pay the use tax at the time of filing the Import Declaration Form (unless the goods are exempt from the use tax).
What You Can Do
There is a lot you can do to be proactive about compliance when importing, such as:
- Knowing your product, supplier, and which U.S. federal government agencies regulate you.
- Ensure your product is not subject to antidumping and/or countervailing duties.
- Request samples of the merchandise ahead of exportation.
- Protect your intellectual property rights by recording your trademark with CBP.
- Keep records providing you used reasonable care.
- Confirm you’re using the correct Harmonized Tariff Schedule of the United States (“HTSUS”) code
- Confirm you’re using the correct value for your product.
- Confirm you’re using the correct Country of Origin for your product. Request a binding ruling to confirm the Country of Origin if necessary.
- Ensure you have a formal written import compliance program.
For a full list of our Top 10 Tips When Importing to Ensure Compliance, click here.
Contact Us
Diaz Trade Law has significant experience in a broad range of import compliance matters. To learn more about the services we offer, contact us at info@diaztradelaw.com or call us at 305-456-3830.