What Is the Puerto Rico Excise Tax and How Is It Paid?

The Puerto Rico excise tax is a levy on specific goods and services intended for use or consumption within the commonwealth. This tax applies to the introduction of certain articles, whether through importation, acquisition, or transfer. The tax framework has evolved, with a broad-based system now complementing specific levies on particular commodities.

This tax is distinct from a general sales tax because it targets bringing goods into the Puerto Rican market, not the final sale. Understanding this tax is important for any individual or business with transactions involving Puerto Rico.

Determining Tax Applicability

The excise tax is triggered by the importation, acquisition, or transfer of tangible personal property into Puerto Rico for use or consumption. The entity responsible for bringing the goods in, whether an individual or a business, is considered the taxpayer liable for remitting the tax.

A wide range of tangible personal property is subject to this tax. While many items fall under a general rate, certain commodities are governed by their own specific excise tax regimes. These include products like alcoholic beverages, tobacco, cement, crude oil, and vehicles. These items have unique tax rates and are often subject to more detailed regulation due to their specific nature.

The tax also extends to certain services. When a non-resident entity provides particular services to a related company operating within Puerto Rico, these transactions can be subject to the excise tax. This provision is designed to address transactions between affiliated companies where value is transferred through services rather than physical goods. The person or entity receiving the service in Puerto Rico is responsible for the tax payment.

It is important to distinguish this excise tax from the broader Sales and Use Tax (SUT). The excise tax is on the introduction of goods, while the SUT is applied at the point of sale or on the use of items when sales tax was not collected.

Calculating the Excise Tax Liability

The foundation for calculating the excise tax is the “tax base” of the property being introduced. This base is the acquisition cost of the goods, which is not limited to the purchase price. It also includes other necessary expenses incurred to bring the item to Puerto Rico, such as freight and insurance charges.

Historically, a component of the excise tax system was the 4% tax established under Act 154, which targeted transactions between affiliated manufacturing companies. However, Act 52-2022 initiated a shift, providing a pathway for affected companies to transition away from the 4% excise tax and opt into a new corporate income tax framework. This optional regime imposes a 10.5% income tax on industrial development income.

The 4% excise tax under Act 154 is being phased out as companies elect to move to the new income tax model. For those still under the old regime, the 4% rate applies to the value of personal property or services acquired from a related offshore purchaser, particularly for groups with gross receipts exceeding $75 million in preceding years.

The excise tax paid upon the importation of merchandise can be used to offset other tax obligations. Specifically, the amount paid can be claimed as a credit against the Sales and Use Tax (SUT) due on those same items. This credit mechanism ensures that the goods are not taxed twice, once upon entry and again at a subsequent transaction.

Required Documentation and Information

Before filing an excise tax return, the taxpayer must gather several documents that substantiate the transaction. The commercial invoice is a primary document, as it provides the seller’s name, the date of the transaction, a detailed description of the goods, and the total cost. Another required document is the bill of lading, which details the type, quantity, and destination of the goods being shipped.

The customs declaration or entry form is also part of the required documentation. This form provides official details about the goods being imported and is used by authorities to assess applicable taxes. The information on this form must align with the commercial invoice and bill of lading.

All this information is used to complete the Monthly Excise Tax Return, Form SC 2225. This form can be obtained through the online portal of the Puerto Rico Department of Treasury (Departamento de Hacienda). Data from the supporting documents are entered into Form SC 2225 to report the taxable transactions for the month.

Filing and Payment Procedures

The submission and payment process is handled electronically through Puerto Rico’s online tax portal, the Sistema Unificado de Rentas Internas (SURI). Taxpayers must have an account on the SURI platform to proceed with filing.

The filing process involves logging into a SURI account and electronically filling out and submitting the Monthly Excise Tax Return (Form SC 2225). The system is designed to guide users through the submission, and some fields may be auto-populated based on registration data.

Payment of the calculated tax is also made through the SURI portal. The system offers electronic payment options, including electronic funds transfer and credit card payments. The payment must be submitted with the filing of the return to be considered timely.

The Monthly Excise Tax Return must be filed and the tax paid no later than the 10th day of the month following the month in which the taxable event occurred. After successfully submitting the form and payment, the SURI system generates a confirmation receipt. This receipt serves as proof of filing and should be retained for the taxpayer’s records.