2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART VII - Administrative Provisions, Procedures, Interests, Penalties, and Additions to Taxes (§§ 33001 — 33423) › Chapter 1068 - Miscellaneous Provisions (§§ 33331 — 33346) › § 33344 - Imposition of sales and use tax by municipalities

(a) Authorization and mandatory requirement.— Beginning on February 1, 2014, all municipalities shall uniformly and mandatorily impose a sales and use tax on a taxable item pursuant to the authorization established in § 32030 of this title. Such tax shall be at a fixed tax rate of one percent (1%), which shall be collected by the municipalities. The one percent (1%)-tax rate shall be imposed on the sales and use of a taxable item in accordance with the same basis, exemptions, and limitations provided in §§ 32001 et seq. of this title, except for the exceptions provided in this section. Provided, That the one percent (1%) fixed tax rate to be collected by the municipalities, as provided in this subsection, shall not apply to business to business services nor to designated professional services. Such services shall be subject, after October 1, 2015, only to the four percent (4%) tax rate provided in §§ 32281(c) and 32282(c) of this title through the effective date of said tax. As of the effective date of Subtitle DD of the Code, said services shall be subject only to the value-added tax rates provided in §§ 32211 and 32283 of this title.
For periods beginning on July 1, 2014, the one percent (1%) fixed tax rate shall be collected in full by the municipalities or fiduciaries to be designated in accordance with this subtitle.
(1) Municipalities, upon approval by the Municipal Legislature, may discretionarily impose the one percent (1%) tax on food products and food product ingredients as defined in § 32001(a) of this title. Provided, That in the case of municipalities that had in effect an ordinance issued by the Municipal Legislature empowering them to impose a tax on food products and food product ingredients, such ordinances shall remain in effect until June 30, 2014.
Beginning on July 1, 2014, municipalities shall impose a one percent (1%) tax on food products and food product ingredients, as defined in § 32001(a) of this title.
(2) Credit provided by § 32124 of this title.—
(A) The manner in which the portion of the credit provided in § 32124 of this title against the one percent (1%) tax collected by municipalities by virtue of this section shall be prescribed by the Secretary through regulations.
(3) Municipalities may adopt regulations consistent with the provisions set forth herein by a municipal ordinance issued to that effect. For such purposes, preemption by federal laws, regulations, and court decisions shall be taken into account, as well as any other authorized exception to such imposition.
(4) The fact that a municipality does not adopt any municipal ordinance does not exempt such municipality from compliance with the obligations and the imposition of the sales and use tax as established in this subtitle.
(b) Use of taxes.—
(1) The moneys originating from the sales and use tax imposed, corresponding to the one percent (1%) to be collected by municipalities shall be used in solid waste collection and recycling programs, the construction of capital works and improvements, healthcare and security, as well as for payroll and payroll-related expenses such as employer contributions or payroll taxes; and for any activity or project consistent with the sound administration of the municipality, including amortization of operating deficits and payment of debt. Furthermore, beginning on July 1, 2014, such moneys may also be used, as provided in § 6752 of Title 21, to nourish COFIM’s Redemption Fund first, and then for the Municipal Transfer, as such terms are defined in said section and § 6753 of Title 21.
(c) Tax collection and payment.— From February 1, 2014, to June 30, 2014, the one percent (1%) tax shall be collected as provided in the first paragraph of subsection (a) of this section. For periods beginning after July 1, 2014, the Board of Directors of COFIM shall designate a Trustee that is acceptable to the GDB (the “Trustee’), in order to, as agent of COFIM with respect to the Fixed Income provided in Section 3 of the Municipal Finance Corporation Act, and of the municipalities with respect to the Municipal Transfer provided in § 6752 of Title 21, receive the one percent (1%) tax collected directly by the municipalities, or by agreements with the Secretary or private business, if the municipality so determines. The revenues of the tax received by the Trustee, designated by municipalities, shall be subject to:
(1) Remit the total amounts collected on account of their corresponding municipal IVU, in accordance with § 6752 of Title 21, to the accounts designated by municipalities. Amounts collected on account of the municipal IVU may not be used by the Executive Branch, including, but not limited to agencies, departments, instrumentalities or public corporations, or be withheld for any other purpose.
(2) Any delays in remitting the collected amounts to the bank accounts designated by municipalities in accordance with § 6752 of Title 21 shall entail the payment of interests pursuant to § 32126(c) of this title. Such interests shall be computed, after such amounts were incorrectly collected and until the date of their payment or return, at an annual rate of ten percent (10%) on the amount not remitted on time. The imposition and payment of such interests shall likewise apply to any portion of the IVU belonging to the municipalities that has been collected and withheld in excess. The amounts thus collected shall be determined through the appropriate audits or certifications required for their implementation, or by sharing information as established in § 32126(d) of this title.
(3) On a quarterly basis, the Secretary and the COFIM shall report to the municipalities the amount of the revenues generated by the IVU corresponding to the six percent (6%) state tax and the one percent (1%) municipal tax, per municipality and per taxpayer, as well as any information necessary to audit the revenues collected as a result of the imposition of the Municipal IVU against the sales volume reported in the Statement of Volume of Business filed with the municipalities for purposes of the municipal license.
(d) Responsibility of banking institutions and/or private businesses.—
(1) In the case of taxpayers who pay by electronic means, the banking institution or private business managing the corresponding points of sale or the deposit shall remit said amount directly to the Trustee’s account.
(e) The municipalities are hereby delegated, with respect to the municipal portion of the IVU imposed in this section and in §§ 32001 et seq. of this title, the same authority as the Secretary of the Treasury under the provisions of this part in connection with the assessment of deficiency, as well as the collection and imposition of additions to the tax, including interests, surcharges, and penalties. The Secretary shall retain the authority to construe and regulate the provisions of §§ 32001 et seq. of this title for purposes of the municipal portion of the IVU.
History —Jan. 31, 2011, No. 1, § 6080.14, retroactive to Jan. 1, 2011; June 30, 2013, No. 40, § 57; Nov. 27, 2013, No. 138, § 1; Jan. 24, 2014, No. 18, § 4, eff. Feb. 1, 2014; Jan. 24, 2014, No. 19, § 11; Sept. 30, 2015, No. 159, § 35.