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Puerto Rico Implements, Temporarily Suspends New Electronic Declaration System for Imports

Friday, August 15, 2014
Sandler, Travis & Rosenberg Trade Report

The Puerto Rico Treasury Department recently adopted a number of modifications to its sales and use tax (IVU) regime that are already having a significant impact on imports from the continental United States and elsewhere. Of particular importance is a new provision that requires importers in Puerto Rico to file an electronic “declaration of imports for use” with the Treasury Department through the new Integrated Merchant Portal (PICO), effective Aug. 1. PICO became operational July 18 but has experienced serious technical difficulties since at least Aug. 4, which has forced the Treasury Department to establish a temporary import clearance process in an effort to avoid delays, resolve any nagging technical difficulties and give importers additional time to register to use PICO.

New Electronic Declaration and IVU Payment Process (Suspended until Further Notice). Once PICO becomes fully operational, importers of taxable merchandise that are registered merchants but are not taking advantage of a mechanism that allows IVU payments to be deferred until the submission of the monthly return declaration (known as non-bonded merchants) will be required to pay the IVU tax (generally assessed at a six percent rate) immediately after filing a complete declaration through PICO to be able to withdraw their goods from the port. By comparison, importers of taxable merchandise that are taking advantage of the IVU deferral mechanism (known as bonded merchants) may withdraw their goods immediately after submitting a complete declaration, except in instances where the Treasury Department has issued a notice of inspection affecting one or more of the containers covered by the declaration. The importer must normally upload an electronic copy of the commercial invoice together with the declaration, although a copy of the applicable purchase order may be provided if the commercial invoice is not available. The importer may consolidate into a single declaration all bills of lading for goods arriving into Puerto Rico on any particular date as long as they were transported by the same carrier and on the same vessel.

A registered importer that wishes to become a bonded merchant must post a bond of at least $10,000 and comply with certain requirements. Bonded and non-bonded merchants must complete and submit electronically a monthly IVU report no later than the tenth day of the month following the date of importation. It should be emphasized that electronic declarations will normally have to be submitted for all imported merchandise regardless of whether that merchandise is subject to IVU. For example, manufacturers that import tax-exempt raw materials into Puerto Rico will be required to file a declaration and comply with certain requirements.

Temporary IVU Payment Process (Currently in Effect). The Treasury Department is temporarily allowing carriers to submit their bills of lading through an existing electronic system known as SISCON. Assuming the bills of lading contain all of the required information, the system will immediately authorize the withdrawal of any goods not subject to import duties. Goods that are subject to import duties will be required to complete all applicable import procedures prior to their release. Both bonded and non-bonded importers will be required to pay the applicable IVU by the tenth day of the month following the date of importation. This temporary process will remain in place until further notice.

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