11 Jan Jan 2020 Sales and Use Tax Exemption on Foods

On January 9, 2020, the Puerto Rico Treasury Department (PRTD) issued the Administrative Determination 20-01 (“Determination”) to temporarily exempt certain items (foods) acquired by natural persons from sales and use tax due to the recent seismic activity experienced through the Island. The exemption will be valid until January 31, 2020, at 11:59 pm.

According to the Determination, the sale of the following taxable items to natural persons, as defined by Section 4010.01 of the Puerto Rico Internal Revenue Code of 2011, as amended, will be covered by this temporary exemption:

• Prepared Foods
• Carbonated beverages
• Confectionery products
• Candies

The merchant will report the sale of the above-mentioned items in their Monthly Sales and Use Tax Return as “Sale of Exempt Tangible Personal Property”. Please note that the exemption hereby provided will not apply to the sale of alcoholic beverages.

Galíndez Insight: 

Please notice that the term “prepared foods” includes food sold hot or that are heated by the seller, or food sold with utensils by the vendor, including dishes, knives, forks, glasses, cups, handkerchiefs or straws. Based on the language of the Determination, it is unclear if these characteristics applicable to “prepared foods” will be applied to the other items listed above and covered by the temporary exemption. However, it will be more likely the case, based upon the exemptions granted for Hurricanes Irma and Maria back in 2017. Therefore, it would appear that in the case of the other items, the exemption will be limited to items acquired for consumption in the store/facility.

Click here to access Administrative Determination 20-01