2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART V - Sales and Use Tax (§§ 32001 — 32171) › Chapter 1047 - Transitory Provisions (§ 32171) › § 32171 - Exclusion of contracts and preexisting public bids

(a) Except for as provided in subsection (b) of this section, retail sales covered by contracts and bids related to taxable items that have been executed or adjudicated before October 31, 2006, shall be exempt from the sales and use tax. The Secretary shall provide the manner in which this section shall be administered through regulations.
(b) In the case of retail sales of taxable services, these shall be subject to the sales and use tax if they were rendered after October 31, 2006, regardless of whether they are the result of contracts or bids that were executed or adjudicated before October 31, 2006.
(c) Sale and use of taxable items after July 1, 2015.— The following provisions shall apply to contracts and government bids existing as of July 1, 2015.
(1) Sales covered under contracts and government bids related to taxable items that were entered into or awarded before July 1, 2015 shall be subject to the sales and use tax applicable to said taxable item as of June 30, 2015. Provided, That any person that is a party to a contract or bid covered under this section may acquire the taxable items object of such contracts at the rate provided in this clause for a twelve(12)-month period or the term of the contract, whichever is less. The foregoing shall apply to contracts relating to the rendering of taxable services, including business to business services and designated professional services if the same were paid before July 1, 2015.
(2) The Secretary shall prescribe by means of an official document the manner in which this section shall be administered; Provided, That merchants whose contracts are covered under this section shall obtain a written authorization of the Secretary to sell goods or render services at the rate of the sales and use tax in effect as of June 30, 2015.
(3) For purposes of this subsection, a preexisting contract or bid shall be that drafted and executed in the regular course of business of a merchant, by and between such merchant and one or more parties, which may or may not be merchants, whereby the merchant is required to sell a specific amount of taxable items at a fixed price. Said term also includes contracts executed after the effective date of this subtitle, but only by virtue of a bid awarded prior to July 1, 2015.
Preexisting contracts, as of July 1, 2015, relating to trade shows and conventions to be held after the effective date of this clause shall be subject to the sales and use tax rate applicable to said taxable item as of June 30, 2015. Provided, That this clause shall apply to trade shows and conventions that have obtained, within thirty (30) days after the effective date of this clause, a sworn certification issued by the Tourism Company stating that it complies with the provisions of this clause and file a request to such effect with the Secretary.
(d) Commercial, industrial or residential construction projects started as of May 31, 2015.
(1) Registration.— Commercial, industrial or residential construction projects that have started any phase thereof upon the filing or approval of a site consultation, construction consultation, project draft or preliminary development with the Permit Management Office, an autonomous municipality or the Planning Board, as of May 31, 2015, may register in a Works and Structures Registry in the Department of the Treasury, in accordance with the parameters to be established by the Secretary through official document, in order to avail themselves of the provisions of this subsection. Contracts entered into by virtue of a commercial, industrial or residential construction project registered in the Works and Structures Registry may also be registered in such registry.
(2) Applicable rate.— The owners of commercial, industrial or residential construction projects and business that are parties to contracts registered under clause (1) of this subsection may acquire taxable items, contract with and receive services from other business and designated professional services that are directly related to said projects subject to the sales and use tax rates and exemptions applicable to said taxable items and services as of May 31, 2015, even if the same are acquired or received after said date, subject to the provisions of clause (3) of this subsection.
(3) Period of the applicable rate.— The rate provided in clause (2) of this subsection shall apply to taxable items and services that are directly related to the commercial, industrial or residential construction projects registered under clause (1) of this subsection until June 30, 2016. Provided, That said date may be extended, at the request of the business, up to twelve (12) additional months or, in the case of the construction of tourist projects and hospital units, for the term of the construction works, at the discretion of the Secretary.
(4) Certificates.—
(A) Works and Structures Registration Certificate.— The Secretary shall issue a Works and Structures Registration Certificate to commercial, industrial or residential construction projects that have been registered in the Works and Structures Registry provided in clause (1) of this subsection. The certificate provided in this paragraph shall be used by the merchant who owns the construction work to claim the rate provided in clause (2) of this subsection, at the time, and in the form and manner prescribed by the Secretary through official document.
(B) Sales and use tax exemption.— The Secretary shall issue a sales and use tax exemption to the acquiring merchant who is a party to a contract entered into by virtue of the commercial, industrial or residential construction project registered in the Works and Structures Registry that is, it turn, registered in said Registry. The certificate provided in this subsection shall be used by the merchant to claim the rate provided in clause (2) of this subsection, at the time, and in the form and manner prescribed by the Secretary through official document.
(C) Tax collection exemption.— The merchant-seller shall be exempt from collecting the sales and use tax from merchants who hold a Works and Structures Registration Certificate or a sales and use tax exemption, except as provided in clause (2) of this subsection. The merchant-seller shall keep in his/her records a copy of said documents as proof of the applicability of the provisions of this subsection to the sale to the merchant-buyer and shall exercise the appropriate degree of care to prevent the purchaser from acquiring taxable items or services using the Works and Structures Registration Certificate or the sales and use tax exemption that, given the business of the purchaser to whom the certificate was issued, would be unreasonable to believe that it could benefit from the provisions of this subsection.
History —Jan. 31, 2011, No. 1, § 4070.01, retroactive to Jan. 1, 2011; Sept. 30, 2015, No. 159, § 23.